Labour’s ‘double-flip’ as election phoney war begins
It was an extraordinary start to the economic year. The production of a 148-page document by the chancellor detailing multi-year costings for almost every Conservative murmur with a tax or spending implication.
It had to be presented from Labour HQ rather than the Treasury, so politicised was its content. The headline: Labour has costed a net £34 billion of Conservative tax cuts, reversal of tax rises and spending rises.
It is undoubtedly a fiscal double-flip. Labour is simultaneously claiming that the Tories would endanger the public sector, cutting the deficit too quickly, yet at the same time that the Tories have squirreled away a £34 billion fiscal expansion.
To be clear the £34 billion number is a highly partisan assessment of every Conservative suggestion, whether or not it is a formal pledge. That is the so-called “credibility gap” with the PBR numbers announced by the chancellor last month.
On top of that, if George Osborne really did want to cut the deficit faster, then that would require further tax rises or spending cuts to the tune of £26bn, per year of faster deficit reduction.
Labour strategists say they have been “remorselessly conservative” in their assessments (e.g. by not costing the grandparents tax credit) and that they expect this document to stand up to “six months” of election scrutiny (is there an election timing hint in there?).
David Cameron responded that he’d found £11 billion of mistakes in 11 seconds of analysing this document and that it’s “complete junk from start to finish”.
My sense is that this document is not the usual guff. Clearly it has been unfair on the Tories by costing many Conservative murmurs that are not pledges, for example a promise to avoid the 2011 increase in National Insurance as a “number one priority”.
Neither does this type of micro-analysis of opposition aspirations reflect too well on the government’s own unwillingness to hold a spending review at Budget time, before an election.
Such a review would reveal clearly that many government departments face double-digit falls in spending. Having said that, there are quite substantial detailed multi-year costings of a variety of election-sensitive issues raised by the Conservative front bench.
There clearly are a host of spending-sensitive opposition hints from which they derive political capital, yet which they have not yet costed. So the £34bn number should be taken with a small vat of salt.
But the general point that the opposition have vaguely made suggestions to various audiences that would cost billions possibly tens of billions, is fair enough.
This is the phony war made possible in the absence of firm tax and spend plans. And this phoney war will develop into an election battle over supposed Conservative plans to raise VAT up to or possibly over 20 per cent.
Yet it’s difficult for Labour to sustain this line of attack without being clear about their own plans.