Conservative Budget
Today's Conservative budget is competent, if a little dull.It's rather difficult to understand, let alone make intelligent coments on. But I've looked at the proposals, and as far as I understand them they are:
* Labour found £22bn of savings, which they indend to spend on front-line services. The Conservatives have found another £13bn, making £35bn (note the Conservative savings may not include the same ones as Labour's).
* With this £35bn the Conservatives are going to plough back into spending £23bn, so overall they will spend £12bn less than Labour (in 2006/2007). With this £12bn of savings they will pay off £8bn of debt and reduce taxes by £4bn.
So overall the Conservatives will be spending £12bn less, but the politically clever bit is they found £13bn of extra efficiency savings, so they'll be spending £13bn more good spending than Labour, so overall they'll be spending £1bn more than Labour.
The interesting question is why they decided to reduce government borrowing by £8bn, and thus only reduce taxes by £4bn, rather than making £12bn of tax cuts. £12bn of tax cuts sounds substantial, and indeed could be spun as £500 for every hard-working family* in Britain. £4bn, obviously, can't. Labour could hardly call it irresponsible given the borrowing levels would have been the same for both parties. Howard did say a few week's ago that he thought governments shouldn't borrow at all, but when he was a minister the government borrowed far more (in % of gdp terms) than they are now, so it can't really be a major issue with him.
*Incidentally Howard said today: "every single penny politicians spend comes out of the pockets of hard working families", which is rather strange, as it doesn't.
posted by Matthew @ 1/17/2005 05:47:00 PM
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