At this morning’s cabinet meeting, George Osborne cited figures from the Institute for Fiscal Studies suggesting that spending in non-ring-fenced departments could fall by 15 to 20 per cent. Unfortunately for Osborne, that forecast is out of date.
More recently, the IFS has suggested that spending in unprotected areas will need to fall by 25 per cent for the Tories to meet their deficit reduction targets.
In light of this, David Cameron is under growing pressure to abandon his pledge to ring-fence spending on the NHS and on international development.
Earlier this lunchtime, Nigel Lawson, who remains an influential figure on the Conservative right, told The World at One that “nothing should be ring-fenced. Everything should be judged on its merit.”
The economist and Labour peer Meghnad Desai has also called on the Tories to break their pre-election pledge to protect spending on the National Health Service.
“Anything said before the election is off. Health is overextended,” Desai said. “We can get something out of the NHS.”
Nick Clegg, of course, distinguished himself during the election campaign by refusing to ring-fence spending in any area. Here’s what he told the BBC back in March:
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.
The Tories’ pledge on the NHS had everything to do with political positioning and nothing to do with economics. Clegg was right to call them out on it.
Intriguingly, the final coalition agreement rather ambiguously stated:
We will guarantee that health spending increases in real terms in each year of the parliament, while recognising the impact this decision will have on other departments.
The impact that it will have on other vital areas (most significantly, education) means that this commitment is unsustainable. Will Clegg now have the confidence to put this argument to Cameron?