Parliament and Politics: Ministers 'may break spirit of election vows'

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Indy Politics
THE GOVERNMENT is threatening to break its election promises with the proposed pounds 16bn cuts in public expenditure, Andrew Dilnot, of the Institute for Fiscal Studies, said yesterday.

'Here is a government just after the general election cutting public expenditure when it said it could fully fund its commitments,' Mr Dilnot said.

Although ministers may argue in future years they are not breaking any specific commitments in the Tory manifesto, evidence from the highly-respected IFS could prove damaging. It suggests that they are breaking the spirit of the manifesto commitments.

When ministers were challenged to make their spending commitments more explicit during the general election, they repeatedly argued that they were spelt out in the 'red book'.

The red book is the Treasury bible. It is issued every year at the time of the Budget and lays out the Government's plans for the economy, including public spending. But figures produced by the IFS suggest that the promised spending totals spelt out in the red book will be broken.

The Treasury's new, much tougher, ceiling on public expenditure implies the planning totals published in the red book will be cut by pounds 6bn and pounds 10bn respectively in 1994/95 and 1995/96.

In the hard bargaining to come, ministers are certain to use the election manifesto commitments to defend their budgets from cuts. But the Treasury will still seek savings.

Virginia Bottomley, the Secretary of State for Health, may feel her budget of pounds 29.8bn for 1993/94 is protected by the manifesto, which said: 'We will, year by year, increase the level of real resources committed to the NHS.'

That promise may be kept, but the rise in real terms may be less generous than planned.

Child benefit was covered by a commitment that 'its value will increase each year in line with prices'. That commitment did not rule out the possibility that the benefit could be taxed to raise pounds 1bn.

Some benefits are index-linked, but the legislation is not binding. For example, the Chancellor, Norman Lamont, is required to increase income tax allowances in line with inflation each year, unless he introduces a regulation not to do so.

For the past two years, he has chosen to freeze the married couple's allowance and in 1981 - at the time of the last purge on public expenditure - all allowances were frozen.

Mr Lamont has insisted that the Government must make the reduction of spending as a proportion of GDP is priority.

During the summer, Michael Portillo, Chief Secretary to the Treasury, will try to cut pounds 14bn from excess bids to limit spending to the planned total of pounds 244.5bn for 1993/94.

It will be the last time that the bilateral negotiations will take place in this way. The system has been criticised for making high spending ministers appear more 'macho' than their Cabinet colleagues.

It used to end in a farcical round of secretive talks at the annual party conference in seaside hotels to meet the deadline for the Autumn Statement.

When Mr Lamont had the job, he was negotiating when a dance band began playing a waltz for an afternoon tea-dance.

In another year, John Major, as Chief Secretary, bargained in the basement of a Brighton hotel to avoid the press, but found it was being used by the Independent.

The Chancellor has scrapped that system. In future, there will be a fixed ceiling, and increases will have to come from other ministers' budgets.

A Cabinet committee will oversee the bargaining to avoid political blunders.