Why the row over cuts has started early


OK, so it goes like this. Phil the defence secretary doesn't want his budget cut any further. The generals won't wear it and anyway, the prime minister promised that defence spending would rise in the future.

So Phil says, why not cut welfare instead?

Theresa the home secretary doesn't want her budgets cut either. She's done enough already, she says, to reduce police pensions. Why not cut welfare, she asks, almost as if she and Phil had been comparing notes.

You might imagine at this stage that Iain the welfare secretary is feeling pretty hard-pressed. But he actually agrees with his colleagues! Iain's already cutting £3.5bn from welfare but he thinks he could probably find another £6bn from the benefits bill.

However, Nick the deputy PM says no, the money's got to be found elsewhere. The hard-up are being squeezed enough already, he thinks.

His mate Vince the business secretary says why not raise taxes instead - a mansion tax comes to mind - or scrap Trident or perhaps even dip into the budgets that give pensioners free bus passes, TV licences and help with their fuel bills?

But Dave the boss says no, pensioner benefits can't be cut. He's made a promise to protect them and that is one commitment he is going to stick to.


Iain the welfare secretary is not so sure and wonders why rich pensioners should keep their support when he is squeezing so many other claimants. But Dave the boss is standing firm.

Meanwhile, a covey of Conservatives mutter to the media that the government should stop protecting international development aid. But Dave the boss is sticking to his guns on that too.

And other Tories whisper that perhaps Mike the education secretary might have to start dipping into his protected schools' budgets.

No he won't, say Mike's allies, otherwise there will be no more free schools. They need premises and premises cost money. So don't touch: free schools and academies are a legacy issue.

And don't forget, Nick the deputy PM doesn't want to upset the teachers having lost students over tuition fees and health workers over NHS reforms. Lib Dems cannot be careless with voters these days. So no cuts to schools.

Welcome to the world of George Osborne, a man with perhaps more advice than he needs. The chancellor is trying to agree how much money the government will have to spend in the first year of the next parliament.

So he's carrying out a comprehensive spending review for the financial year beginning in April 2015. And as part of that review, he's looking for another £10 billion of cuts and all the rest of the cabinet are fighting like dogs to say: "Not me. Cut the other guy."

A few conclusions:

1. Cabinet ministers are showing unusual independence.

They have been dubbed the national union of ministers - the NUM - and are flexing muscles that have not been stretched for a while. This, in itself, is not particularly striking. But what is interesting is the question of why.

Some say it reflects Downing Street's relative weakness; others say it shows ministers are positioning ahead of a post 2015 leadership contest. The Treasury says this is just what happens at every spending review. Maybe, but ministerial tail feathers are on show.

2. This particular spending review is complicated by coalition.

On one level, ministers are just defending their departments' budgets, regardless of their political colour. In other words, this is as much a blue-on-blue discussion as it is orange-on-blue. But there is a coalition dynamic at work. The Lib Dems are looking for ways of differentiating themselves from the Conservatives. And a good old battle over welfare cuts is as good a way as any.

3. This debate has a long way to go.

Yes, the so-called "spending envelope" - the total pot of spending for 2015/16 - will be announced in the Budget in a few weeks' time. But the Treasury has not yet even begun holding formal meetings with ministers and officials to discuss the spending review. The proper negotiations are some months off. And there will be no deal agreed until just before the summer break. This ain't over till it's over.

4. The political danger is that all this fighting muddies the coalition's one clear message.

This is a government that exists to cut the deficit. On that one aim hangs its economic and political credibility. The chancellor cannot open his mouth without telling us that the deficit has been cut by a quarter.

Now we have a string of cabinet ministers - who are supposed to be fiscal conservatives - parading their bleeding stumps for all the world to see. In other words, this government could get a reputation for being full of ministers who want to dodge budget cuts rather than crack down on the deficit.

  • One corrective thought to the breathless copy about cabinet rows. The Treasury says all this is entirely normal for a spending review. It says ministers always intended to have this discussion now so it was out of the way before the pre-election period of 2014. The "quad" of top ministers is still at one on the need to cut more.
  • And it tells this story: during the Eastleigh by-election, the Conservative party held three focus groups in which they asked voters to name a single spending cut they could remember that had affected them. Only one person could do so and they mentioned child benefit. "We are relaxed," says the voice from No 1 Horseguards. "We will have a spending review and the world will not end." We shall see.
James Landale Article written by James Landale James Landale Deputy political editor

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  • rate this

    Comment number 21.

    There is no doubt that we must address the deficit

    The problem is if you have a shrinking economy the share that you set aside to address the deficit also shrinks

    So if you are as clever as this lot you cut fast and deeper
    And the economy shrinks further

    So in the end you have cut everything except the deficit
    The one thing you set out to cut

    All of the pain none of the gain

  • rate this

    Comment number 20.


    The problem is this

    If we want a jet, and the UK one is worse, and more expensive, should we buy it?

    It would need to be a slow process to ensure we had the capability first, such as starting with contracts with overseas companies insisting that and increasing amount of skilled production is done here, then once we have the skills and capacity we could look to a "buy British" policy

  • rate this

    Comment number 19.

    So, at the time of the last election the economy was growing despite the global problems....

    ....excessive austerity proved self defeating as was pointed out to the Coalition......

    ....they went ahead anyway, causing a double dip which only the Olympics rescued us from......

    .....more cuts & a Triple Dip looms for 2013.....

    ...and yet the boy Gideon wants even more cuts.....

  • rate this

    Comment number 18.

    The government needs to focus on meeting its duty of care & obligations to ordinary citizens by using legislation creatively to protect them from exploitation & the greed of companies who think it is acceptable to pay people so little that they need benefits to survive & to overcharge for goods & services not to improve but to line shareholders' pockets.

  • rate this

    Comment number 17.

    We could cut trident, we really don't need it.

  • rate this

    Comment number 16.

    @14. laughingdevil
    No it wouldn't. On benefit they cost around 10k each, salaried about 40k each.
    Not only that but free from all the paperwork they generate companies - especially small ones - could spend more effort on creating the business and employ some to do useful work.
    GDP at the moment includes 'output' from these paper shufflers, its not output at all. Factories make output, not govt

  • rate this

    Comment number 15.

    @11. laughingdevil
    UK military procurement should be forced to be from UK design and manufacture ONLY, Why are we buying American jets when we can and have produced some of the worlds best planes? If there is a war we are stuffed if we can't make it ourselves.
    If ALL government purchases were from UK sources we would have much less unemployment - saving billions and billions a year!

  • rate this

    Comment number 14.

    But if you gut the admin then as you say, thats a lot of unemployed, and then they are all on benifits, not spending etc, would that cost be more than the savings?

    One of the problems with the cabinet system is that it encourages tribalism, if you cut, say leisure facitlites, so you don't have to cut NHS, that doesnt' make sense, as that'll long term increase NHS costs due to poor health!

  • rate this

    Comment number 13.

    The Deputy PM should set an example in leading the cuts-he has 15 SpAds, costing £1m/ yr, never in the history of govt has anyone created jobs to be part of the self serving elite that he is part of. The Literal Doormats have sold out on every principle they stood for and marched shoulder to shoulder with their Tory Masters to give tax cuts to millionaires and cuts to real Welfare. No morals left

  • rate this

    Comment number 12.

    @6. laughingdevil
    You are right, but its not about the cost of the bus pass or the licence, it is the cost of the administration that is the problem.
    A single flat benefit to all would cut masses of administration - job seekers allowance, disability, pension, free bus passes, reduced council tax, housing benefit... all could go (to name a few).
    Millions of government employees. What a saving!

  • rate this

    Comment number 11.

    #9 Agree, having worked alongside them it's obvious where the cuts need to fall.

    Hammond is partly right, any more cuts to Front Line Troops risk capability. (He missed the 3 key words there) However you could do an awful lot of chopping of Generals on 100k plus and I doubt anyone would miss them! And as for their procurement they'd be more successful and cheaper, if they picked stuff randomly!

  • rate this

    Comment number 10.

    This dog of an incompetent govt can't get anything right, so hardly surprising to see this drip drip leaking of orchestrated feeds to the Tory sycophantic media, who accept everything without question. UK is a tiny Island that hardly warrants the sort of Attack (not Defence) spending that the Tory Generals want. Cancelling Trident would save the MoD budget anyway. This is just Tory gamesmanship.

  • rate this

    Comment number 9.

    Of course the MoD needs to be cut more. It's the most inefficient gov. department, why are they buying replacement aircraft for the just scrapped nimrods? If we can do without a large aircraft carrier for 10 years why are we building two? Sell them to China, or India. Cameron appears weak bacause he is, standing behind Nicholson indeed! It's like supporting the old managers at Northern Rock!

  • rate this

    Comment number 8.

    We need to cut the complexity of government in order to save money. A single flat benefit, flat tax system would do that at a stroke. Getting rid of DVLA and the stupid road fund licence would help. Scrap council tax and fund it all from central government would help.
    Then government should buy British, at which point we get more tax from workers in the UK.
    Taxing corps of course would help!

  • rate this

    Comment number 7.

    Empire-building & fighting for 'your' corner has always happened in government: in the 1980s these discussions were called 'bilaterals' as different departments angled for as much as they could get & defeat was known as getting 'a kick in the bilaterals'! But then the focus was on getting cash to serve citizens in your patch rather than personal prestige...

  • rate this

    Comment number 6.

    How many tory voting rich pensioners will actually care if they lose the free bus pass they never use?

    Seriously, of all the promises to decide to keep, this one is even worse than giving aid to nuclear states!

    Welfare should be for the needy, and the rich 65+ don't NEED a TV license or bus pas!

  • rate this

    Comment number 5.

    Business' whose staff require benefits to raise pay should be taxed at a higher rate except in special circumstances otherwise it is the company rather than the staff who is living off benefits.

    Want to avoid legislation on wages or bonuses ? Then make sure your profits are not dependent on government funding of any kind whether direct, through payment of staff or for your firms redundancies.

  • rate this

    Comment number 4.

    another 6bil from the welfare budget? if they really want to so that how about a CAP on the extortionate rent PRIVATE LANDLORDS charge for rent for a run down, riddled with damn property.
    but that'll never happen.

  • rate this

    Comment number 3.

    Welfare extremism must be countered as previous threats to national existence were countered.
    There can be no further defence cuts, especially to naval, naval air and air forces.
    All tax credit payments should cease and the released monies be divided between defence and the N.H.S. All non event specific foreign aid must likewise be stopped also counter productive welfare payouts must stop.

  • rate this

    Comment number 2.

    the torys ought to be honest and say anyone on any sort of benefit should be transported to a island in the middle of a ocean and forgotten about that way there wouldnt be any need for a welfare budget


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