The next chancellor’s spending cuts will have an impact on growth. One of the worries in the Treasury is lower than expected growth will then up the ante on the cuts required to tackle the deficit. It is an horrible negative feedback loop.
If you want a sense of the scale of the challenge, take a look at Chris Giles fascinating piece on the impact of the deficit reduction plans using a replica of the Bank of England’s economic model. Read more
Tony Blair has returned from his Africa safari and will be making a speech in 10 minutes (sorry, some time soon) in a bid to turn Labour’s life-support machine back on.
Here are the two reasons why it probably won’t help: Read more
The problem with any plot involving Mandelson installing David Miliband into the Labour leadership is very familiar. It’s the sticking point which held back Brown’s enemies during the last three or four attempted coups against him.
It is this: the rules around Labour leadership elections are very complicated, especially if the incumbent refuses to step down. Even if Brown was to walk voluntarily there would still have to be a democratic election within Labour for his replacement.
You may remember that the Parliamentary Labour Party only has a third of the vote. Another third goes to the grassroots. The final third is the unions: and the barons are already unhappy at the idea of the Blairite wing of the party fixing the contest in advance. Read more
Try it if you dare. The FT deficit buster — an online simulator of the next three year spending round — allows you to choose your own package of cuts. It should definitely carry a health warning.
The project started as a simple question: can we show what it would take to halve the deficit by making £30-40bn cuts? The answer exposes just how little all three main parties are willing to tell you about the looming spending squeeze.
Take the easiest option in the game: acting as your own chancellor, free of party spending commitments. In today’s splash, we include an illustrative package of measures to make savings in the order of £40bn:
A 5 per cent cut in public sector pay; freezing benefits for a year; means-testing child benefit; abolishing winter fuel payments and free television licences; reducing prison numbers by a quarter; axing the two planned aircraft carriers; withdrawing free bus passes for pensioners; delaying Crossrail for three years; halving roads maintenance; stopping school building; halving the spend on teaching assistants and NHS dentistry; and cutting funding to Scotland and Wales by 10 per cent.
Jim: 10.31pm: Okay, thanks very much for all the comments, feedback and emails. Looking forward to seeing you all again in a week’s time for the grand showdown. Thanks again.
Jim: 10.13pm: Don’t want to give you opinion poll fatigue but there’s one more worth showing you – here’s a link to it. Ipsos MORI (for Reuters) suggests that support for Lib Dems has doubled in marginal seats, from 11 per cent to 23 per cent. Interestingly, the party isn’t taking seats from either of the two main parties. Instead:
The Liberal Democrat gains have come almost completely from people who were not sure they would vote a fortnight ago and now say they are sure that they will.
Jim: 10.07pm: A thought about Gordon Brown. His team must be delighted (if ComRes is right) that he has held his own with Cameron. That was not predicted by anyone. But the three seem to be bunched closely together, still, which bodes ill for anyone who doesn’t want a hung Parliament.
Jim: 10.01pm: It gets worse for the Tories – although Ladbrokes is paying out on a Cameron debate victory, interestingly. hat-tip Sophy Ridge at News of the World:
While David Cameron claimed victory in the instant poll done by YouGov/The Sun, Nick Clegg has stolen the crown in a poll by ComRes/ITV. The Lib Dem leader clinched victory with 33 per cent of the vote, with Brown and Cameron neck and neck on 30 per cent. And a massive 36 per cent said they planned to vote Lib Dem after tonight’s debate – more than both the Tories and Labour.
JP 11.27pm Time for my last attempt at sober analysis of the debate and the aftermath.
What matters ultimately is who came out on top between Cameron and Brown. After all, the Lib Dems have no chance in the majority of seats in the general election. They may still be glad to increase their number of seats from the current 63. Those are the basic facts.
If the preliminary reports are correct – that Cameron was significantly ahead of Brown – that may, ultimately, turn out to be crucial.
Regardless of Clegg’s moment in the sun (“Clegg the outsider seizes his moment in the TV spotlight” is the Guardian front page tomorrow. And “shock victory for Clegg” is the Daily Mail.) It’s still about blues versus reds. Read more
Curious to see David Miliband, former adviser to Tony Blair – and one of the key Blairites in cabinet – turning on Dubya. In a speech today, the foreign secretary compared David Cameron to George W. Bush in what can only be described as a negative way. Read more
What to make of Brown’s new mea culpa over bank regulation in the run-up to the crash?
The prime minister has told ITV (in a programme to be screened tonight at 7.30pm) that in the 1990s the banks begged to be free of regulation and Labour in effect accepted this.
It’s a striking confession. Until now Brown has usually sought to shift the blame on to failures of international – rather than national – regulation of financial markets. And of course he has insisted that the credit crunch was imported from the US.
Alistair Darling has also blamed the banks instead of the regulators as recently as last summer. Read more
So much for an end to class warfare in British politics. At this morning’s press conference the Labour trio (Mandelson, Balls, Burnham) insisted they were not in the business of negative campaigning, despite evidence to the contrary.* Read more
Lord Mandelson has just described the manifesto as “Blair plus”. But how radical is it? We have trawled through the document (70 pages of it) and have found a few new policies and a few old ones dressed up to look new. Read more
I ran into a Tory frontbencher about a week ago who said he had had been asked to go through his department with a fine toothcomb to find potential savings which could be made after the general election.
I asked if he had seen John Redwood’s blog suggesting that cuts of 10 per cent could be instigated without too much pain. He replied that he had got close to that number without too much difficulty.
We didn’t write it up as a news story because it seemed like an obvious and sensible thing for the Conservatives to be doing.
The FT house view is that politicians would be better off coming clean about the deficit – and need for sweeping departmental cuts – rather than dancing around on the head of a national insurance pin. In private, Labour and the Tories alike must be drawing up the slide rule over which programmes, benefits or salary bills to cut and when: surely?
Don’t expect the manifesto from either party to recognise this, however. The troops are still in their trenches; the real fiscal war hasn’t happened yet. Read more
Just picked up a first edition of The Observer and it’s leading with Nick Clegg warning that Britain faces “serious social strife” if a government without a popular mandate starts wielding the public spending axe.
It’s certainly a novel twist on the standard arguments about a hung parliament. Clegg’s pitch is basically that a minority government would be good for the country because it better represents the split of the popular vote.
A narrow victory for the Tories or Labour would wreak havoc because they would be sacking public sector workers, slashing programmes and freezing wages after having secured as little as a quarter of eligible votes. Read more