Comprehensive Spending Review - September 2010

The  comprehensive spending review, the outcome of which will be announced on 20th October by the Chancellor, is the unfinished business of the last Labour government.  These reviews are supposed to take place every four years to set the public expenditure totals for the next four years.  This review is a year late.  It was supposed to have taken place last autumn but the then Labour government decided not to proceed because of ‘economic uncertainty’.   A less charitable explanation is that they were not prepared to hold it just months before a general election because the glaring economic certainty was that the country had run out of money; couldn’t possibly go on borrowing its current rate; and that there would have to be deep cuts in public expenditure.  Indeed, so certain was this diagnosis that the Labour government pencilled in a staggering £40 billion of cuts, it’s just that they were not prepared to tell us where the axe would fall. 

The new leader of the opposition Ed Milliband now has to face up to this unfinished business.  If he is to be taken seriously at all, he cannot criticise the coalition government for wrestling with Labour’s legacy in deciding where to make the cuts, unless he is himself prepared to say exactly what Labour would cut instead.  The only available alternative to him would be to adopt the position that Ed Balls took up during the Labour leadership contest.  Ed Balls has made clear that the Labour government was wrong to plan for the cuts and to try and  eliminate the deficit in four years,  as the former chancellor Alastair Darling set out.  The weakness of the Ed Balls strategy is that it defies the reality of international markets from which we have to borrow the mind boggling sums which we have been reduced to seeking.  Frankly, without a radical plan to cut our deficit and eliminate our dependency on loans they would never have continued to lend us the money, except -possibly, at the most extortionate of interest rates.

It will be really interesting over the next few weeks to see how the new Leader of the Opposition responds to the comprehensive spending review.  Will he just complain at its brutality? Will he offer an alternative set of cuts that will result in the same deficit reduction? Or will he abandon altogether Labour’s previous position on the need to cut the deficit?
We will soon find out and the answer will determine the political agenda for the rest of this parliament.