An embarrassment of cuts
For months, the two major parties have kept quiet on the subject of what, exactly they would cut. Now you can barely shut them up.
The chancellor announced late Monday that he was recommending a pay freeze for top civil servants next year, and a strict 0-1% rise for 700,000 others. Barely two hours later, the Conservatives let it be known that they planned to raise the state retirement age to 66 for men much earlier than previously planned - for some, possibly as soon as 2016.
It's not quite the five stages of grief, but we seem to be past denial - to the stage where each side tries to claim ownership of the handful of less controversial options.
Whomever wins the next election, it has long been obvious that the next government would go for tighter public sector pay control - and a faster timetable for raising the state retirement age. In the most challenging fiscal environment that anyone can remember, each offered potentially large savings, at relatively little cost compared to the alternatives. They were too unterrible to pass up.
It's a solid rule of political economy that if it becomes clear that something will have to happen - it won't be long before politicians try to make it their own. And so it has proved.
On the substance of the two proposals - let me just make a few brief observations.
The first is that the Conservative proposal would save far more money over the long-term - though clearly it would not save much money between now and 2016 (or whenever they decide the new retirement age would kick in).
Tory sources say the change would save £13bn a year from the deficit, or a little under 1% of GDP. There's room to quibble with that number - for example, we don't yet know whether the change will apply to women, and if so, when. On current plans, the shift to 65 for women won't be finished until 2020.
The Conservatives say that the impact on women is "up for review" - in which case it's hard to see how they came up with the £13bn number. But getting people to work longer could clearly deliver this order of saving, albeit over a number of years.
In a paper I discussed back in May, the National Institute for Economic Social Research said that adding one year to our effective working lives would reduce public borrowing by 1% of GDP after 10 years, and reduce the national debt by 20% of GDP over 30 years.
For many in their late 50s, retirement is now firmly in their sights. It's not nothing to be asked to work another six years rather than five - especially if you've been a manual labourer all your life. But the pain will be concentrated among relatively few - and even many 58 or 59-year-olds will have been planning to work beyond 65 of their own accord.
This is a very tight timetable for a change that would normally be decades in the preparing. But it raises tax revenues and cuts pension spending in one stroke. It's not hard to see why the Conservatives decided to go first - before Labour claimed the policy as their own.
You could say the same of Labour's prospective pay "freeze" in the public sector, but that would suggest the two proposals were comparable - which I'm not sure they are.
One could eventually save at least £10bn a year. We don't know what the chancellor's latest pay proposals would save the government, but you can bet it will be in the low hundreds of millions a year. And that's if there is no "catch-up" growth in the pay bill later on.
Why so little? Because the vast majority of public sector workers won't be affected. The Treasury says that 40,000 senior workers will be affected by the pay freeze - and another 700,000 will see their pay rise next year limited to zero to 1%.
That sounds like a lot of people, until you remember that there are more than six million public sector workers in Britain - more than 2.5 million of them working directly for central government (including the NHS). And remember those 700,000 are being limited to a 0-1% pay rise, in a year when the government's own forecast is for inflation of just 1%.
Something tells me that George Osborne isn't going to let things rest there.