Austerity, but for whom? Cuts, but where?

By Mark Dominik

“The age of irresponsibility is giving way to the age of austerity,” David Cameron told the Conservative Party spring conference last year. “The money has run out. Unless we deal with this debt crisis, we risk becoming the sick man of Europe again.”

Over the last 18 months, the “age of austerity” has become the dominant political idea of the Conservative Party. It comes up in almost every speech that Cameron or George Osborne make.

But where are the details? Who will suffer in the age of austerity? And where are the cuts the Conservatives promise are going to be made? Yesterday’s speech by George Osborne provided none of the detail we need.

Osborne has pledged that if the Conservatives win when we go to the polls, they will hold an “emergency budget” within 50 days of the election. Given potential election timetables, this “emergency budget” may be less than three months away.

The Government’s Pre-Budget Report, which came out on December 9th, presents a level of detail and credibility that is completely absent from the current Tory rhetoric. Specific measures – such as putting National Insurance up by 1% from 2011 and levying a 50% tax on banking bonuses – are all detailed and analysed in the PBR.

By contrast, while Osborne and Cameron have relentlessly called for cuts to reduce the deficit, they have provided us no detail about where most of these cuts will fall. This pattern has not changed with yesterday’s publication of “A New Economic Model: Eight Benchmarks for Britain“. Instead of explaining their much vaunted cuts, they have promised billions of new spending, much of which will benefit the well off. According to Treasury estimates, £4.1 billion will be spent on removing the basic rate of income tax from saving and raising age-related personal allowances; £4.9 billion will be provided to “recognise marriage in the tax system”; over £1 billion will be spent cutting inheritance tax; and billions more will be spent on programmes including the National Citizen’s Service and tax credits for grandparents.

In addition to their spending plans, the Conservatives have also pledged not to cut funding for the NHS or international development. These are important programmes – and it is encouraging to hear Cameron say that they are at the heart of the Conservative agenda. But by protecting them from cuts, other programmes will face sharper reductions in spending.

Cameron and Osborne would surely like us to believe that most of the cuts will be felt by Whitehall bureaucrats and fat cat quangocrats. But the truth is that cuts here just won’t save that much money. Even if the Conservatives deliver on their pledge to cut the cost of Whitehall bureaucracy by a third, this will shave only £23 billion off the deficit – less than 13% of the total. And cutting individual quangos will do far less. The oft-maligned Potato Council, for example, costs taxpayers £6 million a year; abolishing it would slash the deficit by a paltry 0.003%. And if we got rid of all of the 960 semi-autonomous bodies funded by Westminster – which include valuable entities like the BBC, the regional development agencies, and the Carbon Trust – we wouldn’t even halve the deficit.

Last week, Lord Mandelson challenged the Conservatives about where their cuts would fall:

“If it were simply to advance by one year the deficit reduction plans that the Government have put in place, it would cost in the region of £26 billion. That amounts to the elimination of half the schools budget, or increasing VAT to 23%.”

Since then, Mandelson has continued to press the Conservatives to clarify their position. All we have gotten so far from Cameron is a vague rebuttal:

“We’re not talking about swingeing cuts. We’re talking about making a start in reducing our deficit.”

And yet he refuses to say where.

The answer, in all likelihood, is one that will win him few votes. Frontline services – and those who depend on them – will feel the brunt of the pain if Cameron hopes to make real cuts.

Labour will not be able to spare these budgets from cuts in the years ahead. But austerity is not the platform Labour hopes to be elected on. If the Tories are so happy with their platform of austerity, why do they continue to refuse to provide any details about where the axe will fall?

Perhaps it is becaues Cameron and Osborne don’t agree with each other about what the “age of austerity” will look like. Or perhaps it is because Cameron and Osborne know that their “age of austerity” will hurt ordinary Britons up and down the country: school budgets may have to be cut; investment in roads, rail, and other critical infrastructure may fall by the wayside; and while we’ll get Andy Coulson’s prison ship, there may well be fewer officers on the beat.

We can’t go on like this. We need to know what the Tories will cut – and we need to know it now.