Shadow Chancellor George Osborne outlined wide-ranging spending cuts to stop Britain “sinking in a sea of debt” in his speech to the Conservative Party conference this week.
Measures designed to save around £7bn a year in the next parliament include a one-year pay freeze in 2011 for all public-sector workers earning over £18,000 a year; a £50,000 cap on annual pension payouts for senior civil servants; the removal of tax credits for families earnings over £50,000; the abolition of child trust funds for all but the poorest families; and a 33% reduction in the cost of the Whitehall bureaucracy, yielding savings of £3bn a year.
The state pension age will be raised to 66 from 2016, a decade earlier than currently planned, which should save an annual £13bn. A cut in inheritance tax is on hold, as is the 50p tax rate.
What the commentators said
“Telling voters how grim things are going to be is rarely the most effective of electoral inducements,” said The Daily Telegraph. But given the mess we’re in, people should “appreciate his truthfulness” – especially after the Labour conference last week ignored the scale of the debt crisis “as uncosted new policies spewed out”.
Still, the difference between the two parties on this issue isn’t all that large, said The Times. The government plans to cut borrowing by 1% of GDP over the next eight years. If the Tories can indeed wring £7bn out of the measures announced this week, borrowing falls by a further 0.5%.
The £7bn plan “does almost nothing to change the debt dynamics of Britain”, agreed Chris Giles in the FT. If we add these plans to the spending cuts pencilled in by the government, borrowing in 2013-2014 would only fall from a projected £97bn to £90bn. And there was “scant detail” on cutting the cost of Whitehall by a third, a key part of the plan.
We also heard nothing about the NHS, said The Times. Health accounts for a third of total spending, yet the budget “remains mysteriously untouchable”. “Grim as they are”, these measures are “dwarfed by the scale of the deficit”, which will reach £175bn or 13% of GDP this year, said the FT. Osborne’s speech should be “only the first page of the Tories’ prospectus”.