I managed to be out of the country for most of the party conferences so much of what I would probably have said has already been covered elsewhere, writes the author of Flip Chart Fairy Tales. But just for the record…
The Conservatives’ statements on public finances were all over the place. Not only did Dave and George forget to mention an extra £13bn of public spending cuts, they also said they were going to offer tax cuts as well. Whether or not this will happen before the deficit is eliminated is unclear. The Prime Minister seems to have changed his mind on that since last Christmas. The IFS calculated that these tax promises would cost an extra £7.2bn. This would leave a 2015 Conservative government with £45bn a year (at least) to find from extra spending cuts, tax increases or borrowing.
Jonathan Portes asked me if I was going to update my 2015 dilemma chart again but I’m not altogether sure how to show it on a diagram.
I suppose tax cuts could be a subset of the No Tax Increases circle and the bit overlapping in the middle would then be a subset of La La Land; something like Dipsy Land perhaps.
It is very unlikely that the next government, whoever is running it, will eliminate the deficit and run an absolute surplus by 2019. Not unless we get a quantum leap in economic growth, which delivers a bounty of unforeseen tax revenue, or the government increases tax rates by quite a lot. The scope for welfare cuts is very small so all the deficit reduction, plus any new spending commitments, has to come by cutting public services, as the Office for Budget Responsibility showed in it’s report last month.
The rest of the article is well worth your time and can be found here.
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