Conservative cabinet ministers at the party's press conference at Millbank this afternoon. Photograph: Getty Images.
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The trap the Tories have set for Labour on cuts

Osborne's claim of a "blackhole" in Miliband's plans is forcing his party to shout louder about its commitment to continued austerity. 

The sight of five cabinet ministers (George Osborne, William Hague, Theresa May, Nicky Morgan and Sajid Javid) taking the stage at the Tories' first press conference of this election year was a rather odd one. As I noted on Twitter, it looked like a leadership hustings with Boris strangely absent, or the reformation of an aged pop group. But the quintet were all unambiguously singing from the same hymn sheet. The choice, we were repeatedly told, was between Tory "competence" and Labour "chaos", between sticking to "our long-term economic plan", or returning to "the mess" of 2010. 

The event was held to mark the launch of the Conservatives' attack dossier on the opposition's spending plans. The 82-page document (decked out in Budget red to lend it spurious authority) claimed to have uncovered a £20.7bn black hole in Labour's programme (alleging £23.26bn of spending commitments against £2.52bn of cuts/tax rises). But it quickly began to unravel under the mildest of scrutiny. As several journalists noted during the Q&A, the document falsely equates criticism of cuts with a commitment to reverse them. For instance, nowhere has Labour suggested that it will cancel £3.35bn of local authority cuts, or £83m of Arts Council funding reductions. 

But Javid, the Tories' attack dog of choice, had a ready response: "If Labour thinks that we're wrong in asserting this, then it's up to them to come out today and they can say 'We will not reverse those cuts.'" This the Labour press team promptly did, tweeting that "p.44 of Tory dossier says Labour will cancel cuts to the arts budget. We won't." The rapid rebuttal allows Labour to claim that its plans are fully costed and credible (as the IFS has said) but at the cost of reminding voters of its commitment to continued austerity. In short, "We didn't like the cuts, we attacked the cuts, but we're going to have to keep them." 

This frugal stance opens up political space for the SNP and the Greens, both having recently eaten into Labour's left-wing support. The dilemma that the party faces is between appearing less credible than it would like or more austere than it would like. At the briefing that followed, an Osborne aide declared satisfiedly: "If they want to pull out other examples and say 'That's not our policy' that is going to cause them massive problems." 

The Tories are not short of their own problems. When challenged on how they would pay for their promise of £7.2bn of tax cuts, Osborne merely asserted that his cuts were forecast to produce a surplus of £23bn. But having pledged in 2010 to all but eliminate the deficit and ended up only halving it (and even then only as a share of GDP), why should we take his word for it? Javid fared even worse on The World At One when he conceded that the Tories hadn't "spelt out" how they would afford the planned tax cuts. But their wager (and it may prove right) remains that their poll lead on economic credibility is so great as to allow them to play faster and looser than Labour. In the meantime, they can be reasonably satisfied with forcing the opposition onto the mine-laden pitch of austerity. 

George Eaton is political editor of the New Statesman.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.