The Coalition came together to cut the deficit. So far they have kept their spending increases within plans, but have experienced a shortfall on receipts, so the task is half done.
The Autumn Statement provides a suitable opportunity for all main parties to set out their intentions for the next five years. Would any wish to go further and faster in curbing spending? Do any want to go faster with tax rises? Do any have a way to boost tax revenues with lower or similar rates, through promoting growth?
The UK economy needs to develop higher productivity, which in turn can lead to higher pay. The efforts going in to strengthen education and training, to improve the science base, to bolster manufacturing and to make it more worthwhile to work are all policies designed to foster more and better paid jobs, which are the key to economic improvement and to lower welfare and benefit spending.
The main policies revealed by Labour and Liberal Democrats reveal nothing of substance about how they wish to tackle the deficit. Labour’s cuts are tiny, and their tax rises all absorbed by spending pledges. In addition Labour wrongly think increasing the top rate of Income Tax to 50% would increase revenue, when history shows it would cut receipts. The Lib Dem’s Mansion Tax will not make a lot of difference to total revenue.
The Conservatives have got furthest in talking about the magnitude of public spending reductions they will need to eliminate the deficit in the next Parliament. The OBR figures today will show us where the government thinks it has reached on the long road to balanced books.