George Parker, our political editor, wrote a fine piece this morning* revealing that ministers reckon they are effectively saving £4bn a year on lower benefit payouts (each year up to 2014) as a result of unemployment staying lower than experts predicted.
He disclosed that Brown and Darling plan to use this “windfall” money to fund a splurge.
The prime minister and Alistair Darling, chancellor, have struck a deal where money released by falling jobless rates can be used to fund more spending, in spite of their insistence that cutting the £178bn deficit is the top priority. Any additional revenues from higher-than-expected growth in the economy are earmarked to tackle the deficit.
In other words, for all the talk of cutting the deficit, there could be another giveaway in the forthcoming Budget from the prime minister whose trademark is announcing big investment promises.
The story reminded me of a comment from a Labour aide last month who told me that spending on unemployment benefits was “£14bn” lower than expected. Now I wonder whether he was totting up the cumulative figure from now until 2014. Are we going to see that number produced in the run-up to the election as “proof” that Labour’s anti-recession policies have succeeded? I wouldn’t be surprised.
* Always wise to praise the boss
Jim Pickard
Kiran Stacey