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Cuts: what they don't want you to know

By Channel 4 News

Updated on 27 April 2010

Cuts in the next parliament could be the biggest since WWII, says Channel 4 News Economics Editor Faisal Islam - but the main parties are unclear about where the axe will fall.

Money (Reuters)

The IFS said that the Conservative plans to get rid of "the bulk" of the deficit over the course of the next parliament will involve the biggest spending cuts since the second world war, while Labour and Lib Dem plans will result in deeper cuts that at any time since the 1970s.

No party, according to the IFS, has come "anywhere close" to making clear where the axe will fall.

The Liberal Democrats have identified a quarter of the cuts they need to implement, but the Tories have identified less than a fifth and Labour only one eighth of what they will need.

The damning condemnation of the parties comes on the day that Labour campaign chief, Lord Mandelson, clashed with journalists who tried to pin him down on which spending programmes will be reigned in or scrapped if the party is still in power after the 6 May general election.

In sometimes tetchy exchanges at the Labour morning news conference, Lord Mandelson refused to set out plans beyond what is written in the Labour manifesto.

The IFS says the fact that all three parties have ringfenced certain public services from cuts, notably the NHS, will pile the pressure for savings onto other areas of government spending.

According to the IFS figures, the Conservatives will have to find almost £64bn a year by 2014/15, Labour almost £51bn and the Liberal Democrats nearly £47bn .

The Financial Times suggested that in order to find additional cuts of £30-40bn, the incoming government might have to cut public sector pay by 5 per cent, freeze benefits for a year, means-test child benefit, abolish winter fuel payments, and cut free TV licences and bus passes.

It might also have to cut prison numbers by a quarter, axe the navy's new aircraft carriers, stop school building, delay London's Crossrail railway, halve spending on teaching assistants and NHS dentists, slash funds for Scotland and Wales by 10 per cent.

But all three parties have reacted by trying to focus on the parts of the IFS report that criticise their opponents.

The overwhelming majority of people claim their economy is their number one issue. So could policy, rather than personality, now start to swing the polls?

Gary Gibbon: revealed - the eye-watering spending cuts to come:

At the IFS briefing on what the parties are NOT telling you about their cuts plans.

Here in percentage terms (after factoring in fixed costs and manifesto pledges) are the degree to which the IFS thinks you are in the dark: you don’t know 87 per cent of the cuts Labour would have to make if they stuck to their election promises, 82 per cent of the Tory cuts that would come your way, 74 per cent of the cuts the Lib Dems would have to make.

And this was meant to be the election for reconnecting with the voters and rebuilding trust. What does it say about the mandates parties have to inflict pain and the issues of social solidarity?

Confronted with this analysis today, Lord Mandelson said: "When I last looked, neither the Financial Times nor the IFS is standing in this election.

"Of course every party knows that we are going into a period which is going to present a very tough public spending climate and that means the choices we make, the priorities we choose and the way we switch spending from lower-priority programmes to higher-priority ones is the bread and butter of this election.

"What we have done is to set out in our manifesto what we believe are the priorities for our country and for families. Everyone can see those choices."

David Cameron was also pressed on where the Tories would make their savings.

He said: "The Conservative party in opposition has gone further than any opposition I can remember in my political lifetime of saying not just this is what we will do in the first year, in terms of taking out £6bn of wasteful spending to stop the jobs tax.

"But we've also said we're going to freeze public sector pay for a year, we've said we are going to ask people to retire a year later from 2016, we've identified some benefits like the child trust fund that we won't go on paying to better-off families.

"I can't find anything the government has said that equals that in any way. We have taken some of the big decisions about pensions, about benefits about pay which the government hasn't done."

Faisal Islam: IFS: Cuts under all three - but Lib Dems 'least bad'
So there we have it. Clarity, honesty, and candour in the election campaign. Not at any of the party political press conferences. No, it's been left to the trusty holders of the spending shield of truth: the Institute for Fiscal Studies.

The top line is this: the Conservative manifesto implies the largest sustained cut to departmental public spending since the second world war.

Before Labour starts printing its attack poster... The Labour and Liberal Democrat plans merely imply the sharpest sustained cuts since the IMF humiliation in 1976.

Now try and get a politician to admit this picture of Britain in the parliament for which they seek to be elected.

On tax rises, the IFS has looked at the manifestos, and feel they imply an extra £7 billion for Labour, an extra £3 billion for Conservatives (reimposing half the effective 'cut' from their much vaunted jobs tax 'cut') and the Lib Dems are pretty much on target.

On spending, the Conservatives need to find £64 billion in cuts by 2015 from unprotected areas such as education, housing, transport etc. They have not explained 82 per cent of this, or £52 billion of cuts.

Labour need to find a £51 billion cuts from unprotected areas and have not explained 87 per cent, leaving a £44 billion shortfall.

The Liberal Democrats manifesto implies £46.5 billion of non-priority cuts, and have not explained 74 per cent of it - a £34.5 billion shortfall.

So all pretty opaque, but the IFS say the Lib Dems are the "least bad" in terms of the numbers. More to come...

IFS conclusion
IFS director Robert Chote said: "Repairing the public finances will be the defining domestic policy task of the next government. For the voters to be able to make an informed choice in this election, the parties need to explain clearly how they would go about achieving it.

"Unfortunately, they have not. The opposition parties have not even set out their fiscal targets clearly. And all three are particularly vague on their plans for public spending.

"The blame for that lies primarily with the government for refusing to hold a spending review before the election."

The IFS report said that the timetable set out by Labour - and broadly accepted by the Lib Dems - would see a combination of tax increases and cuts by 2016/17 reaching £71bn a year in today's terms.

The IFS said that the Tory plans would "make the tightening even more front-loaded than it already is, at a time when the recovery remains fragile", but would not make an enormous difference to the long-term outlook for the public finances.

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