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Sunday, March 20, 2005
The 35 billion pound row

The political analysis in Sunday's newspapers is dominated by the on-going row over the Conservative's proposals for GBP35billion "cuts" in government spending in 2011-12. In contrast to the prevailing opinion in Friday's newspapers that Labour's attack has backfired, many newspapers today turn their fire on the Tories.

The Business' leader (p15) argues that "The Tories ... have only themselves to blame for the Labour smear: it is absurd that a party which believes in the market economy is even talking about what it would spend in 2012, the unfortunate consequence of having a jejeune Shadow Chancellor in Oliver Letwin, who belongs in a think-tank rather than the Tory front benches."

Peter Hitchens, writing in the Mail on Sunday (p31), argues that the "Useless Tories" have been "reduced to marginal squabbling about how much, rather than how or why" taxpayers' money should be spent on public services. "Once, the British people would have had a chance to decide whether they preferred to spend their own money or let the State spend it for them. Not any more."

Roger Bootle, in his weekly Economic Agenda column for the Sunday Telegraph (Business, p4), rightly points out that "The Conservatives' planned slowdown in the growth of government spending is quite mild and would leave spending in the UK relatively high compared to other English speaking countries." The column includes a useful bar chart of government spending as a percentage of GDP in English-speaking countries. The UK sits at 41%, ahead of Canada and New Zealand at 39%, the US and Australia at just under 36% and Ireland at 34%. "This, rather than free bus passes for pensioners, is what the Budget should be about. It will surely form the battleground for the coming election."

William Keegan's column in the Observer (Business, p12) says: "I sniff the whiff of revenge in the way Labour has seized a figure of GDP35bn for putative 'Tory spending cuts' in years to come. The GBP35bn rankles with Labour; the Tories, in two previous elections, made much of the threat of GBP35bn of tax increases under Labour, to devastating effect." He also has some advice for the Conservatives. "I feel it is difficult for the Conservatives to have it both ways - warning of tax increases under Labour because of the alleged state of the finances, while promising tax cuts, should they win the election, from the very same budgetary finances."

Peter Kellner, Chairman of YouGov, challenges the assumption that Labour's attack had backfired. Quoted in the Sunday Express (p12-13), he argues that "What Labour is doing is a mirror image of what Chris Patten did with Labour's 'double tax whammy' in the 1992 election, when he was chair of the Conservatives. The issue then was not what the different parties were actually proposing, it was the general sense that maybe Labour would take money out of your pockets and not give anything back to you. What Labour is trying to do is to sow the seeds of doubt about what the Tories would do with public services if they got back in. You don't have to believe that the Tories will cut that particular sum, just that they might spend a bit less on health and education. On the whole, Labour will be happy that the issue got quite a lot of coverage and airtime in the media."

No doubt this row will continue as the election campaign progresses.