How the Tories are trying to fool us.

Each day further evidence becomes available suggesting actions being taken by this government against ordinary working people are based on a desire to reduce the role of the state. These cuts have little or nothing to do with the size of our economic problems, or the national debt.

Central to their argument has been their consistent campaign to “trash” the economic strategy of Alistair Darling and the previous Labour government. What they fail to admit is that figures now emerging clearly show Labour was ‘on target’ to tackle our financial problems – and all whilst keeping everyone in jobs and not reducing frontline services.

The Labour government, in their last Budget, estimated Public Sector Net Borrowing (PSNB) would be £166.5bn in 2009/10 and projected borrowing would fall from £163bn in 2010/11 to £74bn in 2014/15. Subsequent figures, now released by the Tories, have shown borrowing in 2009/10 was actually only £156.1bn - $10.4bn below forecast.

When the Office for Budget Responsibility published their first report earlier this month, they produced lower forecasts for net borrowing in 2010/11 and for every year to 2014/15, though they failed to acknowledge these forecasts were based on the Labour government’s plans and NOT as a result of any Tory cuts.

Admittedly the OBR did forecast the structural (or cyclically adjusted deficit) will be a little higher than expected in the next Budget. In the Labour budget, Alistair Darling predicted the structural deficit would be 7.3% of GDP in 2010/11 and dropping to 2.5% in 2014/15. The OBR estimates suggest this could be closer to 8% of GDP in 2010/11 and 2.8% in 2014/15.

What the Office of Budget Responsibility and the Conservatives lamentably failed to admit is these differences fall well within normal margins of forecasting error and offer no evidence to suggest Labour was mismanaging the finances.

Tomorrow’s Budget
The Tories have already said in their Coalition Agreement “the main burden of deficit reduction [will be] borne by reduced spending rather than increased taxes”. There has yet to be a clear statement from Osborne on what the likely ratio between cuts and taxes will be, but the Institute for Public Policy Research (IPPR) have argued this could be as much as 4:1, compared to the 2:1 ration proposed by the Labour government. This would imply we can expect Osborne will begin his assault on public spending by implementing cuts of up to £60bn and tax increases of approximately £15bn.

The Tories have already said they will protect NHS spending, so cuts will have to be found elsewhere. Clearly they will not be found by efficiency savings alone, and although scrapping ID cards will be welcomed, it will only account for a small part of the total. Despite Tory protestations, frontline services will have to be cut.
Evidence of this comes from the fact that Tory and Liberal deficit hawks regularly cite the Canadian experience, as if it was a model of ‘best practice’. What they don’t make public is how the Canadians savaged healthcare and sacked thousands of nurses, increased the size of classes in their secondary schools and virtually ripped the heart out of their armed services.

If frontline services are cut, as now seems probable, the poor and vulnerable will undoubtedly suffer and if you add to this their intention to increase VAT to 19.5 or 20%, then you effectively raise the weekly bill every worker has to pay out each week. In an analysis of Tory proposals, the IPPR demonstrated how the poorest 10% of the population would have about 2.1% less disposable income each week, compared to only 0.9% per week for the richest 10% of the population. A case of the Tories looking after their own again?

George Osborne has said Britain is on the “road to ruin” unless he implements swingeing cuts tomorrow. What he is really saying is that he will ruin the lives of thousands of ordinary working class people and turn their lives into misery and squalor. As Brendan Barber, general secretary of the TUC said: "Getting the fundamental budget judgment wrong will increase unemployment, particularly among young people – a million of whom are already on the dole – and hit the vital public services on which low and middle income households depend."

There will be few people looking forward to the Chancellor standing up in the House of Commons tomorrow.