Breakthrough moment as reality over the deficit exposed at last: can the parties and the voters face it?

It’s taken long enough but the credibility gap between all three main parties and reality has blown wide open over the scale of public spending cuts . In an election supposed to about restoring trust in politics, will any of the parties come clean in the final Leaders’ Debate on Thursday or do we have to wait for reality to dawn on May 7?  

The scale of the cuts was exposed in the Financial Times two days ago. Today, the parties were  hiding in a smokescreen of details about child tax credits and the Broken Society.

At this morning’s presser, two veteran journos swept the fog away and dared Labour to come clean (Catch up with The Daily Politics in BBCi Player later). Where will the £30b-£40b cuts identified  in the Financial Times fall, pressed Sky’s Adam Boulton, talking over Mandleson’s evasions?  If you don’t own up ,why do you expect to be taken seriously? asked the BBC’s Andrew Neil?  They met with stonewalling so blatant it was embarrassing   Balls and Cooper blah blahed in reply, terrified that voters would punish them if they told the truth.

 From the FT

A saving of that scale would require all of the following: a 5 per cent cut in public sector pay; freezing benefits for a year; means-testing child benefit; abolishing winter fuel payments and free television licences; reducing prison numbers by a quarter; axing the two planned aircraft carriers; withdrawing free bus passes for pensioners; delaying Crossrail for three years; halving roads maintenance; stopping school building; halving the spending on teaching assistants and NHS dentistry; and cutting funding to Scotland and Wales by 10 per cent. (NI not mentioned but I’m sure, included).

The Institute for Fiscal Studies have just produced a devastating analysis pointing towards a false choice between  impossible cuts or tax increases. From IFS director Robert Choate’s opening statement

On tax, measured as a share of national income and converted into today’s terms, Labour has already put a £17 billion a year tax increase into the pipeline for the coming parliament. We estimate that Labour would need to announce furtther tax increases worth £7 billion a year in today’s terms to meet its goals.

The Conservatives have announced a £6 billion net tax cut on top of what is in the pipeline, but we estimate that they would need to reverse about half of this to meet theirs.

The Liberal Democrats have announced a £3 billion net tax increase and would not need to do any more unless they found the squeeze on spending unacceptable. When David Cameron said of the Liberal Democrat income tax cut in the first debate “It’s a beautiful idea. It’s a nice idea. We cannot afford it” that is a slightly odd accusation for a party advocating a net tax cut to make of one advocating a net tax increase.

On spending, no party has announced plans for significant welfare cuts and, without them, their plans would require deep cuts to spending on public services. Over the four years starting next year, Labour and the Liberal Democrats would need to deliver the deepest sustained cuts to spending on public services since the late 1970s. While, starting this year, the Conservatives would need to deliver cuts to spending on public services that have not been delivered over any five-year period since the Second World War.

All the parties have said they wish to protect some parts of public services spending. By 2014–15 the Conservatives need to find cuts of almost £64 billion a year in their unprotected areas, Labour almost £51 billion and the Liberal Democrats almost £47 billion. No party has come anywhere close to identifying where their savings would come from.

The Liberal Democrats have identified about a quarter, the Conservatives less than a fifth and Labour about an eighth of what they would need. But bear in mind that the Liberal Democrats would need to find more spending cuts than the others in 2015–16 and 2016–17.

The real choices lie  in a mix of

  • Ending ring fencing
  • Imposing real cuts
  • Raising taxes

Will the parties come clean and can voters face reality?