Conservative cuts? The possible candidates for the chop
The spring conference this week may offer clues to Tory capital spending priorities. Mark Leftly evaluates possible candidates for the chop
Sunday 28 February 2010
Every few seconds, the shadow chancellor's pale face turned to his notes, occasionally a forced smile emerging from his lips. George Osborne does not possess the slick presentation skills of David Cameron, his political master, but he did impress at last week's Mais Lecture, the annual City institution.
Osborne wedded the Conservative Party to eliminating "the structural deficit over a parliament", should it come to power at the forthcoming general election. A key aspect of this plan would be the establishment of an independent Office for Budget Responsibility, which would audit the public finances.
All of this talk of austerity from the three major parties – the Liberal Democrats would ditch Trident, ID cards and the Eurofighter – has led to fevered speculation over which major public sector projects might be slashed the other side of the election. A source close to the Bank of England huffs: "Whoever gets in power is going to have to take the axe to many projects."
Assuming the opinion polls are correct and the Tories do take power, the next prime minister would have the advantage of having few, if any, ties to already announced schemes. He would be able to wield the axe with far greater ferocity than Gordon Brown, and has already talked tough on reforms of such major bodies as the BBC Trust and the Financial Services Authority.
The Conservative Party's spring conference this week is likely to throw up a few clues. Of the many projects that industry sources believe could be struck down, the following six have suffered from the greatest speculation. Here is an assessment of their likelihood of termination.
Future Rapid Effect System (Fres)
This £16bn armoured vehicles programme is planned to replace the Ministry of Defence's ageing fleet. In pure value for money terms, this is not a bad price tag: the vehicles should last 40 years. The lack of top-quality equipment in Iraq and Afghanistan has also highlighted the need for improved vehicles to protect British troops in future conflicts. However, cutting Fres, which has already been delayed for years, would be a quick win for a new government.
Even the former defence secretary, John Hutton, admitted that Fres had been a "shambles" so far, with a shake-up of the MoD's equipment and procurement function vital to save money in the future. Certainly, the future of Fres is likely to be decided by a strategic defence review following the election.
Axe Rating: 6
Long rumoured to be on the Tories' hit list, the A400M is the hugely troubled pan-European military aircraft programme. By May, three of the Airbus vehicles should have completed test flights, but its future funding might not be secured.
The contract was priced incorrectly at about €20bn, and costs have since spiralled, meaning that Airbus's parent Eads faced a huge, unaffordable bill to complete the programme. In principle, the seven European nations involved, including the UK, France and Germany, have agreed to a €3.5bn bailout. About £220m will come from British taxpayers. The seven nations have different needs for the craft.
A defence source says that Cameron might salvage the A400M in order to protect Airbus and the likely benefits for the industry as a whole: "The Tories are looking at it and the programme seems to be vulnerable. But do we want to jeopardise the whole Airbus exercise for one programme that, in itself, will lead to technology benefits for commercial aviation?"
Axe Rating: 7
OK, Osborne has already vowed to retain Crossrail, but the £15.9bn price tag has meant that he has won over few sceptics of the scheme's viability. With compulsory purchase orders and early engineering works already in place, it is probably too late to mothball the project.
But there could be cuts to the Heathrow to Essex scheme as there are still big question marks over the financing, according to the Association for Consultancy and Engineering.
Expect anything from scaled-down station designs to another look at the trains needed. A source close to the project says: "Someone might want to reassess parts of the project, but the core cost is the 20km tube section, which is the 'all or nothing' of Crossrail."
Axe Rating: 1
London to Swansea electrified rail line
The Transport Secretary, Lord Adonis, wants to electrify Britain's rail networks. He announced in December that, by 2017, two-thirds of all rail travel will be on electrified routes in a £1.3bn upgrade programme, including the much touted London to Swansea revamp. The Tories have shown commitment to rail upgrades, but a Welsh Conservative Party spokesman was reported to have said of the move earlier this month: "The disastrous state of the country's finances, after 13 years of Labour government, means Labour could be making false promises that the country will not be able to afford for some time."
Axe Rating: 3
NHS IT system
Cameron is angry about this project and little wonder: already it's £10bn over budget and four years late.
Even Labour admits this has been a failure, promising to scale back the programme and postpone some parts of it further.
The LibDems are in favour of scrapping the data resource project altogether and the Tories could see benefit in adopting the same policy.
In December, the shadow Health Secretary, Andrew Lansley, said of Labour's postponement: "After seven years Labour has finally acknowledged what we've said for years: that the procurement for NHS IT was costing billions and not delivering."
Axe Rating: 10
Building Schools for the Future (BSF)
The shadow Schools Secretary, Michael Gove, has said that the Government's investment in school buildings has been "marked by waste, bureaucracy and inefficiency".
BSF has been one of Labour's key ideas of the past 10 years, a £55bn plan to rebuild or renovate every secondary school in the country. Many analysts believe that this programme will inevitably be cut as public finances tighten.
Although the troubled programme has been put on track in recent years through a series of structural reorganisations, Gove has still pointed to the "quite severe delays" and claims it is over budget.
Most likely, the grand ambitions of the programme will be cut back, with the neediest areas still getting new schools.
Axe Rating: 2
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