David Cameron appears on The Andrew Marr show this morning.
Show Hide image

How Cameron misled on cuts in his Marr interview

The PM is giving the false impression that most of the pain lies in the past. 

In January 2010, after George Osborne's promise of an "age of austerity" had dented the Tories' popularity, David Cameron reassured voters that there would be no "swingeing cuts" in the first year of a Conservative government. Today, at the start of another election year, he sought to play a similar role. After Labour's repeated attacks on the Tories for planning "extreme" and "ideological" cuts (that would reduce spending to its lowest level as a share of GDP since the 1930s), he insisted on the Marr show that his party's plans were "moderate, sensible and reasonable". He rejected the OBR's statement that 60 per cent of the cuts are still to come and argued that £12bn of reductions to welfare would limit the damage to departments. 

Cameron's pitch may have been politically astute, but it was riddled with evasions. He rejected the OBR figure on the grounds that it ignored the cuts that Osborne had already announced for 2015-16. But while these cuts have been set out, not a single one has been implemented. Cameron is giving the false impression that the pain already lies in the past.

He went on to argue that £12bn of welfare cuts would prevent some departments being reduced by as much as 40 per cent by the end of the next parliament. But what he didn't say is that these reductions will merely ensure the Tories can maintain cuts at their current pace (as opposed to accelerating them). As the Resolution Foundation has outlined, this means a cumulative cut of 42.4 per cent to local government, 46.5 per cent to the Home Office, 55.1 per cent to Work and Pensions, 58.6 per cent to Communities and 64.8 per cent to the Foreign Office (Defence would be cut by 34.8 per cent and BIS by 35.7 per cent). The Tories' pledge to eliminate the deficit by the end of the next parliament and to do so without any further tax rises explains why the reductions are so deep. 

And, although the Conservatives often seek to give the reverse impression, just £3.5bn of the £12bn welfare cuts they plan to impose have been announced (in the form of a promised two-year freeze on benefit increases). While further measures are expected to be set out in the party's manifesto (such as limiting child benefit to two/three/four children), it's an open question as to whether we'll get all £12bn by 7 May 2015. 

Meanwhile, Labour has hit back at Cameron's claim in today's Sunday Times that its plans would mean £13.5bn extra in debt interest payments over the next parliament. It says that the Treasury analysis:

1. Wrongly assumes that Labour would not eliminate the current deficit until 2020/21, when it has said it would do so no later than 2019/20.

2. Is based on economic forecasts from a year ago, not the 2014 Autumn Statement. 

3. Involves "double counting" of debt interest payments through misuse of the OBR's ready reckoner.

Labour's shadow chief secretary to the Treasury Chris Leslie said:

David Cameron's desperate campaign smears and dodgy claims continue to unravel as the Tories have once again got their sums totally wrong. These figures are based on false assumptions about Labour's plans and out of date economic forecasts.

Labour will cut the deficit each year, and get the current budget into surplus and national debt falling as soon as possible in the next Parliament. That means we will do this by 2019/20 at the latest and earlier if we can - not by 2020/21 as the Tories falsely claim.

Labour's tough but balanced plan contrasts with George Osborne's increasingly risky and extreme approach. The Tories are desperately trying to distract attention from their plans which the OBR says will slash public spending to a share of national income last seen in the 1930s.

David Cameron has also made over £7 billion of unfunded tax promises. These could only be paid for by another Tory rise in VAT, even deeper cuts to public services or both.

Nor can the Tories hide from the fact they have borrowed over £200 billion more than planned because of their failure to deliver rising living standards.

George Eaton is political editor of the New Statesman.

Show Hide image

Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

0800 7318496