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Clegg's bold move on spending cuts

Lib Dem leader's promise not to ring-fence departmental budgets will split the Tories.

I'm rather impressed by Nick Clegg's confirmation that the Lib Dems will not ring-fence any departmental budgets. It's one stance, along with his party's pledge to raise the income-tax threshold to £10,000, that deserves serious attention.

He told Radio 4's The World At One:

We're not entering into this Dutch auction about ring-fencing. Good outcomes aren't determined by drawing a red line around government departmental budgets.

This is shrewd politics as well as good economics. The line that all government departments should share the pain equally is likely to appeal to voters and it gives the Lib Dems a chance to split the Tories.

David Cameron's pledge to ring-fence spending on international development ("we don't hate foreigners") and the NHS ("it's not a 60-year mistake") has angered many on the right of his own party. And with good reason.

The Institute for Fiscal Studies has estimated that the Tories' promise to protect spending in these areas, combined with their pledge to reduce the deficit faster than Labour, means that all other departments face cuts of 22.8 per cent by 2014-2015.

As the implications of this (especially for defence) become clearer, we can expect Cameron to come under a great deal of pressure to change his stance.

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