Jo Johnson

This is the hair shirt parliament and MPs will need to lead from the front. Ministers have started the process by axing the limos, one of the toughest cuts so far negotiated. Now, as trailed in the last parliament, it is time for rank-and-file backbenchers to do their bit to fill in the £156bn deficit. The House of Commons Commission, a body run by John Bercow, the speaker, has agreed to cut £12m from the budget for the House in the current year.

This marks the start of what the body claims will be a fundamental review of expenditure, which will deliver further savings over the next three years. The savings to be made this year are 5 per cent more than the Commission had originally planned, and will reduce estimated spending for 2010/11 to £219m.
This action follows the Commission’s decision in December 2009 to cut House expenditure by 9 per cent by the end of 2012/13. Read more

On the basis of Osborne’s spending plans, it looks like the coalition is either:

Before you accuse me of exaggerating, take a look at the rough maths. (This is courtesy of the ever-sharp Ian Mulheirn at the Social Market Foundation.Read more

There seems to be a growing appetite to cut the cost of public sector pensions. A year ago, it was basically off the cards — no party would have dared take the political risk. But the coalition are now slowly making the case. There is a strong chance of a levy being imposed, if the government holds its nerve.

The stats in the OBR report today, which for the first time breaks out the annual cost of public sector pensions until 2015, are genuinely concerning. Read more

David Cameron is warning that every individual will be hit by the coming cuts. But don’t expect the pain to be spread fairly across all groups. If the coalition agreement is anything to go by, the elderly will be given a free ride at the expense of everyone else.

We’re in the midst of a fiscal crisis, but there is hardly a perk left for over 60s — the most wealthy section of society (see IFS chart) — that hasn’t been protected by the coalition. Read more

From the FT’s Money Supply blog

The first £5.75bn of spending cuts has just been announced by George Osborne, Conservative chancellor and David Laws, his Liberal Democrat chief secretary in the Treasury garden. It is something of a spectator sport for large numbers of Treasury officials, who seem either keen to get the knives out, or who have too little work on, and are ripe for the chop.

But these cuts represent just the starter, “the first steps” as Mr Laws admitted. The main course is coming later. This near £6bn is tiny compared with the £40bn to £50bn that is coming from 2011 onward. So it is worth not getting too excited by today’s cuts. Read more

The Labour national executive has opted for the long game: the next leader will be anointed on September 25. This is probably bad news for party’s right wing: the longer the campaign, the more pressure there will be to woo the grassroots with promises to protect spending.

It was apparently a “friendly and comradely” meeting. But the stakes were high. Those lobbying for an extended campaign wanted to stop a “coronation” and give all the outsiders  (Burnham, Balls etc) time to grab the spotlight.

But I expect the bigger problem for David Miliband will be the kind of commitments that will have to be made in the leadership race.

This campaign is not only going to straddle the emergency Budget. It will end just weeks before the most austere spending review in living memory. There’s a good chance of a “cuts vs investment” auction. Read more

An interesting chart from the Institute of Government. Note the Lib Dem cabinet positions control less than 10 per cent of departmental spending (excluding the all powerful David Laws, of course).

Not sure whether this is a blessing. Axing 25 per cent of spending from transport or the police is never a career enhancing move in politics. But Vince Cable and Danny Alexander face some particularly tough choices on Scotland and student fees, which have the potential to backfire horribly on the Lib Dems. Read more

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 modelRead more

Politics for the next five years will be dominated by painful public spending cuts. But in this election every time a politician speaks, it seem to be in order to protect one more benefit perk. So far, in terms of new spending guarantees vs new cuts, the campaign score is at least £25bn to 0.

Take the appearance of Liam Byrne and Philip Hammond on Newsnight last night, which turned into the most expensive interview of their political careers. Without blinking, the two would-be guardians of the public purse ruled out means testing child benefit.

Price tag? Around £5bn to ensure millionaires (in fact anyone family earning more than £25,000) can still pick up their benefit perk. That’s roughly the size of the defence equipment budget.

Any cuts to match that? Of course not. If you try our Deficit Buster online tool, you’ll see that means testing child benefit is one of the easiest of a horrible set of choices. The public surely deserve to know where the Tories and Labour will find that £5bn. 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.

 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

Lord Mandelson is in charge of the Labour election campaign but, in reality, he has little choice but to work to Ed Balls’ playbook. The truth is that when the Tories promised to reverse part of the National Insurance tax rise, it turned this election into a big test of the Balls vision of British politics.

The origins of this lie in the November Pre-Budget Report, which set the cornerstone of the Labour message. Spending on schools went up in real terms, a great triumph for Balls at a time public sector cuts. The downside was that National Insurance had to rise. Read more