Training | 2009.09.07
NHS and aid will not be spared cuts
Health and overseas aid budgets will not be spared from a programme of public spending cuts that will be rolled out by ministers over the next two months, the Guardian has learned.
Gordon Brown and the chancellor, Alistair Darling, agreed the outlines of the new strategy through two lengthy discussions this summer – and it will be billed as a return to New Labour\'s original commitment to public service reform.
Though Labour will not ring-fence any government department\'s spending programme, it will focus on "protecting activities and priorities" such as education and fighting child poverty.
David Cameron, intent on softening his party\'s harsh image, has said health and international development budgets will not be reduced, a position that has infuriated the Tory right.
The first outlines of the new strategy, seen as vital to Labour\'s re-election campaign, are due to be unveiled in a Callaghan lecture by Darling tomorrow and by the business secretary, Lord Mandelson, in a speech to the Labour centre-left group Progress next Monday.
It has also been backed by Ed Balls, the children\'s secretary in what is an effective inner group of ministers.
Brown has until recently been reluctant to acknowledge the need for spending constraint, partly because he did not want to play into what one cabinet minister described as "the media stereotype that we are all cutters now".
A cabinet source said: "The new economic context is a challenge for us, but New Labour in its original form never saw spending more money as the only solution. We need to revisit the original New Labour approach of public service reform. We are going to put the pedal on reform, but we are also going to project our values in what we propose. It is not going to be the Tory position of a bonfire of spending. We will differentiate ourselves from the Tory position of spend less and reform less."
The source insisted there was no logic to excluding the health and international development budgets from restraint. The government spends £119bn a year and £6bn on international development. But trailing the new strategy, Brown told G20 finance ministers Labour would cut the deficit by half through a mixture of tax rises and spending cuts, a promise first made in the April budget.
In his most explicit remarks yet he said: "Our tough approach will be based on an approach of frontline first: to shift resources from areas where we can achieve greater efficiency, reducing costs where we can, selling assets we no longer need, and giving priority to investments that can secure the jobs of the future and deliver improved frontline services for the general public."
Chief secretary Liam Byrne said details of how the deficit will be cut will be given in the autumn pre-budget report .
The cabinet source said it would be easier for Labour to set out a tighter spending programme now that the G20 finance ministers agree public spending internationally should not be slashed back over the next year before the threat of a continued recession has been fully lifted.
The G20 ministers meeting in London on Saturday agreed it would be premature to set out stimulus exit strategies at this stage with even the German finance minister, Peer Steinbrück, saying it is too early to set a fixed time for when countries should start to withdraw their stimulus measures.
Brown argued at the G20 meeting on Saturday that the more optimistic growth forecasts for 2010 were predicated on international stimulus measures continuing through 2010. Insisting the spending programme had to be continued, Brown suggested that more than half of the $5tn fiscal expansion committed had yet to be spent.
The source said the government programme would have to go beyond efficiency programmes and assets sales to be credible.
The shadow chancellor, George Osborne, insisted today that Labour\'s plans to increase spending next year would jeopardise the recovery. "Someone has got say enough is enough." He also claimed the Tories had not opposed fiscal stimuli outside the UK and argued the uniquely dire debt position of the UK required Britain to rein in spending.
But No 10 denied that the UK net public debt as a percentage of GDP was uniquely high, pointing to IMF figures showing net public sector debt as a proportion of debt left Britain the second least indebted country in the G20.
For more information, please visit
http://www.guardian.co.uk/politics/2009/sep/06/new-labour-strategy-cuts
