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23 June 2010updated 27 Sep 2015 2:18am

Will George Osborne really make those 25 per cent cuts?

Michael Portillo warns Chancellor that extra tax rises may be needed to take the strain off cuts.

By George Eaton

The most significant moment in George Osborne’s Budget came when the Chancellor confirmed that he will cut spending on all non-protected departments (everything except Health and International Development) by 25 per cent on average. We won’t get the full details until the spending review in October but that figure is chilling enough on its own.

Osborne told the House that he recognised the “particular pressures” on education and defence, a clear suggestion that spending in these areas will not be cut by that amount. But concessions for some means even more pain elsewhere. How would our substandard transport system cope with cuts of say 30 per cent?

It is for such reasons that some Tory figures are starting to doubt whether it will be either desirable or possible for Osborne to cut spending by this amount.

Michael Portillo, once chief secretary to the Treasury, has said he is “highly sceptical” that Osborne will maintain his plan to reduce the deficit through a 77:23 ratio of spending cuts to tax rises. He predicts that the coalition will revert to something like the 50:50 split adopted by Ken Clarke during the last major period of fiscal retrenchment in the 1990s.

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Even the Economist, which endorsed the Tories at the election, has called for a more balanced apporach:

The Tories have said they want to rely on taxes for a fifth of the consolidation. That may be too ambitious. If something like 2 per cent of GDP were found by higher taxes, leaving spending to be cut by 5 per cent of GDP, it would still be a tougher mix than all but two of the ten biggest OECD deficit-cutters managed.

I expect once the cuts start hurting their constituents, a significant number of Tory MPs will feel the same way.

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