Political debate must focus on true depth of cuts to fund debt

WITH just ten days left in an election campaign that has had saturation coverage, have the politicians been honest on the extent of spending cuts and tax increases that lie ahead? And is the public any the wiser?

The answer, on any examination of the scale of debt, is an emphatic 'No'. The budget deficit for the year just ended is a post-war record at 163 billion. Overall government net debt is set to rise to 1.4 trillion, or 74.9 per cent of GDP, in 2014-15. Such a figure is almost too big to contemplate. Arguably a better guide is the debt interest on government borrowing which has to be paid each year. The figure for 2010-11 is 40bn. The Institute for Fiscal Studies reckons this will rise each year to hit 73.8bn in 2014-15. That is more than the current total annual spending on defence and transport combined.

Set against the enormous debt and borrowing totals, the numbers being bandied about by the main parties on savings and economies barely cover the debt interest, let alone the debt itself. Labour plans to halve the budget deficit in four years. Conservative plans suggest an extra fiscal tightening of 8bn over Labour proposals by 2015-16. The Liberal Democrats, on IFS calculations, are broadly in line with Labour, with a slightly higher share of the pain falling on higher taxes through to 2013-14, followed by a tougher spending approach.

But with scant detail provided on where the axe might fall, meaningful debate about the practical effects of the rival proposals is impossible. As Alf Young writes in The Scotsman today: "The instinct, on all sides, is to wrap the bitter pill to come in more anodyne coatings, labelled efficiency savings or tax-avoidance crackdowns."

All main parties have shied away from the brutal truth on the scale of the cuts ahead. An authoritative analysis, compiled by the Financial Times , concludes that almost the whole population would be hit as the new government makes 30-40bn of cuts in real terms to halve the deficit.

Its research, based on government figures, suggests a saving of that scale would require all of the following: 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 for the elderly; 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 spending on teaching assistants and NHS dentistry; and cutting funding for Scotland and Wales by 10 per cent.

This is unmentionable in an election campaign that is fooling voters by great omission. But it is indicative of the scale of the spending reductions now lying in store. Those who deny such measures have an obligation to explain where else the axe should fall. This is where debate must now surely focus in the final days. Failing this, what else is it but a phoney war?