Seeking the truth about spending cuts

By John Ware
BBC Panorama

All three party leaders now acknowledge the need for cuts

For a man who coaxed the prime minister to acknowledge publicly that public spending will have to be cut, the chancellor's response to my question was somewhat unexpected.

I suggested that people now want the "specifics" - what will those cuts be?

"That's nonsense," replied Mr Darling.

Yes, he said, there would be "difficult decisions", but any suggestion that Britain was about to descend into "the dark ages" was both "simplistic" and "an insult" to viewers.

In our interview for a BBC Panorama programme examining the new reality of cuts now conceded by all three parties, the Chancellor was in an uncharacteristically combative mood.

He had come straight from briefing the Observer newspaper that it was time Labour came out fighting because "we don't look as if we have got fire in our bellies".

The war of words between Labour and the Conservatives about which party is best able to make "nice" versus "nasty" cuts without details from either on exactly what will be cut is still going strong, yet leaves the public none the wiser.

A recent IPSOS/MORI poll found that 50% of people still do not accept that there is a need to cut spending to pay off the national debt, now rising at a giddy £5,656 per second, and set to go on rising until 2014 when it will settle at just under £1.4 trillion.

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Eight years

An even higher percentage of the electorate are probably unaware that based on current government forecasts, Britain's is facing not one but "two parliaments of intensifying pain", as the Institute of Fiscal Studies (IFS) predicted.

The IFS said that for each of the next eight years, a new round of cuts will have to be found to fill the black hole in the nation's finances - a hole the Treasury estimates amounts to a £90bn shortfall between tax revenues and government spending.

On Sunday, Prime Minister Gordon Brown said it was wrong to suggest that Britain was borrowing more than most countries. The UK entered the fiscal crisis in the bottom half in the International Monetary Fund's debt league of the world's 20 most industrialised countries.

What Mr Brown did not say was that by 2014, Britain will be in the top half - and that the increase in the amount we have borrowed will proportionately be the third largest among G20 members.

So when can voters expect details from both Labour and the Conservatives of where the respective axes will fall?

'Direction of travel'

Mr Darling said what people wanted to know at this stage was the government's "direction of travel". He said he would set out "priorities" in his pre-budget report later this year.

Even then, details about how the money will be rationed out between individual departments will not be forthcoming.

As for the Conservatives, little has been added to the now familiar list of cuts Mr Cameron has been recycling for months - chiefly the the cancellation of the government's identity card scheme, the scrapping of the NHS computerisation project, the winding up of regional assemblies and development agencies and possibly an end to tax credits for the better off.

To this list he has added cuts to some largely unspecified quangos - and perks for MPs.

Shadow Chancellor George Osborne said the Conservatives would use their conference in Manchester next week to set out more specifics.

The Conservatives say they can deliver better for less

But a senior Conservative party policymaker also told me the desire to keep pressing for those details was the "stupid end of the debate" because it failed to address the current deficit.

He is right in the sense that you can only cut a programme once and the challenge for the next government will be to find deep and sustained savings every year - possibly for as long as eight years. Not since the decade of cuts in 1920s have we confronted such a long-term challenge.

So what's the "brainy" bit of this exercise, I asked the policymaker?

"The iceberg below the water," he said, "which is where the really big sustainable savings are."

He meant a radical reform of public service delivery - the grey area where the rhetoric from both sides is hazy.

What fat?

While Mr Brown has also talked about public service reform and cutting unnecessary programmes and lower priorities, Mr Cameron said that only his reforms will provide sufficient savings while not just protecting, but improving frontline services by raising productivity to private sector levels.

It is a big boast. The big question remains - how?

By cutting out multiple layers of bureaucratic fat between Whitehall and frontline delivery, comes the answer.

What fat exactly is that, I ask?

The "armies of bureaucrats" controlling things from the centre, I am told, such as those who regulate, set standards and monitor them - a promise that has proven easier for governments to make than to actually deliver.

Mr Cameron insists that he will break new ground by changing "the way this country is run."

It appears the Conservatives are looking to devolve centrally driven services and encouraging other bodies to perform tasks traditionally performed by the state - voluntary groups, councils and so on.

Mr Darling committed to deliver a 'direction of travel' on cuts

The Conservatives believe this "evolutionary rather than revolutionary" process will ultimately deliver services more cheaply and effectively, because those at the front line will be motivated to innovate.

Of course, if Labour's leaders win the election, the deficit means they too will have to settle for a smaller state - unless they are prepared to tax up to Swedish levels.

Mr Darling said that for him, size was not the key issue. If there were services that third parties could do better than government, fine. But, he said, his fundamental difference with the Tories is that he believes government can make a bigger difference in people's lives.

"The Tories aren't bad people" he said. "We just come from different places."

NHS quangos

Quangos are also in the Lib Dems' sights. At their recent conference, the party proposed a 20% cut in NHS quangos, which have a collective budget of £1.2bn.

They also called for salaries of health service managers to be severely curtailed. Lib Dem Treasury spokesman Vince Cable has also suggested a levy on homes worth more than £1m.

How much people want government to be involved in their lives is complex stuff for voters to get their teeth into. And yet the size of the state and its role look set to be the defining issue of the next election.

Making an informed choice will need detailed analysis of each party's plans to reshape the state. It would be a travesty if the details were left to the hurly burly of the last few weeks of campaigning. The clock is ticking.

Panorama: The Truth about Spending Cuts, BBC One, Monday 28 September at 2030 BST.