Coalition lies on Labour’s legacy

At their press conference today, Baroness Warsi and Chris Huhne dishonestedly tried to lay the blame for the approaching spending review at Labour’s doors. Later today, Warsi claimed in an email to Conservative party supporters that, “the cuts to come are Labour’s cuts.” The claim is a lie. The cuts to come are the Coalition’s cuts.

The June Budget set out how the Coalition’s deficit reduction plan differed from Labour’s plan which was set out in the March Budget. The Chart below using data from Table 1.1 of the Budget sets out the different approaches.

Chart: Deficit reduction (£bn by 2014-15)

The Bank of England’s Inflation Report set out today that:

“The measures announced in the June Budget are projected to lead to a somewhat faster and larger reduction in the deficit in coming years than projected in the March Budget …

“The direct impact of the fiscal consolidation is likely to have some dampening effects on demand. Some households’ disposable income is likely to be reduced or grow more slowly as a result of the consolidation, and some companies are likely to face lower public sector demand for their goods and services. But those effects may be offset, to some degree, if the consolidation improves investor confidence and reduces the risk of a significant rise in long-term interest rates.”

The Bank’s language clearly indicates that the Budget was a choice. The Coalition put concerns about long-term interest rates ahead of concerns about growth. The fallacy of their argument is that lower growth will lead to more job losses, lower tax receipts, a widening deficit, and the prospect of rises in interest rates anyway.

In their press conference Chris Huhne claimed, “Labour’s last budget planned cuts of £50 billion, so why are they unable or unwilling to admit where they would fall?” Yet the Coalition has – to date – only set out one third of the total cuts that it plans. The Coalition set out £6.2 billion of cuts in May followed by £11 billion of cuts to welfare spending in the June Budget – a mere fraction of the eye watering ~~£52~~ £83 billion in cuts that are planned by the Coalition this Parliament.

Make no mistake about the Coalition’s tactics. David Cameron’s capitulation this week on school milk, showed how the Government have finally woken up to the pain that will be caused by their ideological approach. The Lib Dems and Tories may be “in this together” but the cuts are theirs and no-one else’s.

SSP Campsie

RT @leftfootfwd #Condem #LibDems & #Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/shamikdas/status/20900550832 Shamik Das

#ConDemNation lies on Labour's legacy: Libs & Cons may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS @leftfootfwd
http://twitter.com/jimmelly/status/20900722083 Jim Melly

RT @leftfootfwd: Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/evenflowdave/status/20900806603 dave martinez

RT @sspcampsie: RT @leftfootfwd #Condem #LibDems & #Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/rdstalker/status/20901104367 Rachel Danae Stalker

RT @leftfootfwd: Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/psbook/status/20902257818 Political Scrapbook

Good job from @leftfootfwd derailing the Tories' "it's Labour's cuts" refrain http://is.gd/edfe8
http://twitter.com/petebowler/status/20902383693 Pete Bowler

RT @leftfootfwd: Coalition lies on Labour's legacy http://bit.ly/cgV8PS
http://twitter.com/acidfascists/status/20902644788 Acid Fascists

RT @leftfootfwd: Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://bestblogs.labourhome.org/2010/08/11/coalition-lies-on-labour%e2%80%99s-legacy/ Coalition lies on Labour’s legacy « The best Labour blogs

[...] More… [...]
Ash

“the eye watering £52 billion in cuts that are planned by the Coalition this Parliament”

That figure’s too low, surely? Do you mean £82 billion?

And Huhne has a point; Labour still haven’t said anything substantial about where they think spending should be cut. I hope once the dust settles after the leadership election we’ll see a clear and credible party line emerge on which of the coalition’s spending cuts and tax rises they support, which they oppose, and what they’d do differently.
http://twitter.com/tommilleruk/status/20904864103 Tom Miller

Coalition lies on Labour's legacy: http://www.leftfootforward.org/2010/08/coalition-lies-on-labours-legacy/
http://twitter.com/benlyons1/status/20905350564 Ben Lyons

RT @tommilleruk Coalition lies on Labour's legacy: http://www.leftfootforward.org/2010/08/coalition-lies-on-labours-legacy/
Will Straw

Ash – Thanks. £83bn is the right number. I had misread the table for that line. I agree that the Labour leader has to produce their own set of (more modest) spending cuts in the autumn. Indeed, it would have been far better if this exercise had taken place in advance of the election. But the Coalition have still only scratched the surface in terms of what they plan to do so Huhne was on shaky ground.
http://twitter.com/odhran2/status/20906212016 Odhran Mc Alinden

RT @BenLyons1: RT @tommilleruk Coalition lies on Labour's legacy: http://www.leftfootforward.org/2010/08/coalition-lies-on-labours-legacy/
http://twitter.com/wolfpupjon/status/20911965629 Jon (Bambi) Page

RT @leftfootfwd Coalition lies on Labour's legacy – LD & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/jonhawkes73/status/20912120846 Jonathon Hawkes

RT @leftfootfwd: Coalition lies on Labour's legacy http://bit.ly/cgV8PS
http://twitter.com/yorkierosie/status/20925611868 yorkierosie

RT @leftfootfwd: Coalition lies on Labour's legacy http://bit.ly/cgV8PS
http://twitter.com/patersonmark/status/20936885849 Mark Paterson

RT @leftfootfwd: Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/hitchineng/status/20937146909 Hitchin England

Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS via @left
http://twitter.com/mariansanderson/status/20953628335 Marian Anderson

RT @leftfootfwd: Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS
http://twitter.com/mariansanderson/status/20953787208 Marian Anderson

Check this out @Thomas_Turrell http://bit.ly/cgV8PS
http://twitter.com/drkmj/status/20954474133 DrKMJ

Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS via @left
http://twitter.com/yorkierosie/status/20958419670 yorkierosie

RT @leftfootfwd: Coalition lies on Labour's legacy http://bit.ly/cgV8PS
http://www.order-order.com Guido Fawkes

The Big Lie as only myself and John Redwood seem to be pointing out, is that there is no cut in government spending, it will increase less fast and the government’s debts will continue to rise such that by the end of this parliament the increase for every man, woman and child will be £1,500.
http://twitter.com/hitchineng/status/20959785739 Hitchin England

Coalition lies on Labour's legacy – Lib Dems & Tories may be "in this together" but the cuts are theirs alone http://bit.ly/cgV8PS via @left
Fat Bloke on Tour

WS

The point needs to be made that Sniffy’s emergency budget contained £12bill of tax cuts including a significant reduction in the Corporation tax rate over 4 years.

Consequently he cut benefit spending to pay for tax cuts. At an individual level this may be a wash for some people but the one big winner will be the banks and the reduction in corporation tax.

Consequently lots of changes for a another dose of corporate welfare. Transparency and tax fairness need to be pushed hard to increase the tax take from the corporate sector. Tax tourists / hypocrites like RM / NI / Sky need to be named and shamed.

Regarding the deficit and some of your earlier comments, there is some validity in the notion that GB / AD should have set out their reduction / rebalancing plan in Nov 2009. However the big negative in all this is the fluid nature of the Treasury’s “conservative” forecasts for the deficit.

They had a bend on them that Beckham would have been proud of, while the £22bill difference between the PBR in Nov 2009 / £178bill and the actual outcome, latest figure if £156bill would mean that the plan would have been out of date before it started.

Consequently better to wait until the bottom had been reached before planning the way out.

Looking at AD’s plan to reduce the deficit by £50bill over 4 years, then the £50bill investment budget and a thorough shake out of the flab caused by lazy civil servants and indolent ministers would mean that it would have been sore but not catastrophic.

The Sniffy slashathon unfortunately is a completely different matter, the upper middle class dog boilers now in charge seem to positively revel in the pain they are going to cause.

Finally give no ground to the Orange book revisionism that the Club Med debt crisis caused the change of heart. They are scraping the barrel to try and cover their embarrassment of being found out.

Apples and oranges, we have North Sea oil, a floating exchange rate and a history of paying off our debts. They had none of these.

In addition the “markets” have woken up to the fact that is the cure kills the patient, then no matter how bad the original disease they are in a worse position.
Fat Bloke on Tour

WS

Any info / update on the structural deficit farrago?
Is the output gap still set to 4%?
Have the “Three Brothers Grimm” stopped laughing?

As I have said before a figure for the structural deficit set at 80% of the actual deficit,

(11.0 total / 8.8% structural / 2.2% cyclical)

after a fall in GDP of 6.4% sets new standards for the craven nature of economic forecasting with the dog boiling economic establishment surrounding our elected government.

It is just another excuse for a re-run of the 1930′s and cut the dole.
Liz McShane

Guido – ..”The Big Lie as only myself and John Redwood seem to be pointing out, is that there is no cut in government spending…”

Tell that to the frontline workers in the public sector who are having to limit/cancel crucial services…..A social worker friend of mine is having a meeting today with her team to discuss exactly this!

ConDemNation.
Tom White

Guido Fawkes lectures on ‘big lies’. What next? The pope on how to combate paedophiles? Tony Blair on the morality of a just war? Gordon Brown on people skills…??
Tom White

*Combat, obviously before anyone gets difficult…
mike

Why has Cameron stated that if the economy improves
he will not restore any projects cut now

if its not about cuts for the sake of cuts
Mr. Sensible

Will, I think you forgot to mention that Huhne and his friends supported Labour’s plans before the election, or so they were telling us on the doorsteps.

Perhaps Huhne can clarify when the Lib Dems changed their mind on the deficit? Was it before the election, or in the coalition talks?

Either way, as they come up to their party conference, the Liberals need to take a good look at themselves for propping up this tory government.

And, ‘Fat Bloke on Tour’, good point well made.

And you mention the forecasts, I think the OBR’s forecasts based on Labour’s figures tell a story.

And, Mike, yes, I noticed that too. Talk about letting the cat out of the bag…
http://socialisteconomicbulletin.blogspot.com/ Michael Burke

Guido says there are no cuts because spending will rise. That’s a non sequitur. Only the wilfully self-deluded would ignore the effects of rising prices, so that even unchanged outlays would require real cuts in services and jobs. According to the Budget (Table C5) inflation will will rise by 16.1% across the economy oer the next 6 years, while in some sectors, noably healthcare the inflation rate is persistently much higher. In table C13 Departmental spending (RDEL) will rise by 1.6%, annual expenditure (RAME) not including interest, EU transfers and accounting adjustments will rise by 10.2% and public sector net investment will fall by 57.3%. These are real falls of 14.5%, 5.9% and 73.4% respectively.

We know, thanks to the Guardian leaks, that the real OBR forecasts for employment are for 1.3mn jobs to be lost in the public and private sectors as a result of £82bn in cuts. Advocates of slower or reduced cuts, £50bn in the March 2010 Budget, need to explain why this wouldn’t result in pro rata job losses (and service cuts), of the order of 800,000.