Here’s why Osborne will have to raise taxes

Get ready for tax rises as “efficiency savings” of £35bn fail to materialise.

With the coalition still planning to cut all non-ring-fenced departments (that's everything except Health and International Development) by 25 per cent, this morning's report by the National Audit Office should serve as a wake-up call.

First, it found that Whitehall departments are almost certain to fail to make the £35bn of efficiency savings promised by the last Labour government back in 2007.

Second, it found that, of the £10.8bn in savings already reported by the government, many are unsustainable. After reviewing around £2.8bn of the total, it found that only 38 per cent "represented sustainable savings", with 44 per cent rated as "uncertain" and 18 per cent as non-existent.

These figures are highly significant because the Conservatives' pledge to cancel the planned rise in National Insurance assumed not only that Whitehall would save £35bn, but that the Tories could save £12bn on top of this.

The government will undoubtedly portray this as an indictment of the Brown years but here's the rub: if Whitehall fails to cut spending by £35bn (around 3 per cent of departmental spending) how will it ever meet George Osborne's target of 25 per cent cuts?

The likelihood, as Michael Portillo, once chief secretary to the Treasury, has argued, is that it won't. Theoretical savings often fail to materialise in practice and the civil service is notoriously astute at protecting departmental budgets and evading cuts.

What this implies is more tax rises. Like Portillo, I am highly sceptical that Osborne will maintain his plan to reduce the deficit through a 77:23 ratio of spending cuts to tax rises. The coalition may be forced revert to something like the 50:50 split adopted by Kenneth Clarke during the last major period of fiscal retrenchment in the 1990s.

Still, one veteran minister has apparently had no trouble identifying cuts of 40 per cent. Here's what he told Benedict Brogan:

Oh, that was easy. I just threw in plenty of programmes for children and vulnerable people. That should give them something to think about. I wasn't born yesterday. If that's how they want to play this game . . .

George Eaton is political editor of the New Statesman.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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