The ‘emergency Budget’ is almost upon us. It’s going to be a game of two halves. On the one hand, with the Office for Budget Responsibility acting as fiscal referee, there’s Cameron’s promise of pain, and yet more pain – the unavoidable penalty for all those foul-ups under the old management.
On the other, there’s the more nuanced commentary from Clegg, who has displayed some fancy footwork about ‘progressive cuts’ sparing the most vulnerable.
The picture has been further complicated by the mixed messages from OBR chair Sir Alan Budd, who this week forecast slower growth – but also lower borrowing – than anticipated.
On a number of public accounts indicators, the independent watchdog found the previous incumbents didn’t look half bad. So not entirely an own goal then for Osborne, but not exactly an emergency either.
Undeterred, the chancellor sought to redeem himself by pronouncing the situation ‘worse than we thought’ – and ploughing ahead with his draconian cuts package for June 22.
Like the insistent drone of the vuvuzelas, the mantra of austerity now appears unturnoffable. And as 20% budget cuts begin to hit home, that drone will turn into a wail.
So are government departments match ready? Not very, judging from the announcements dribbling out of Whitehall.
Take health, a relatively protected area, but one that nevertheless needs to tackle a £20bn spending gap (see pages 14–17).
Ministers appear uncertain about which way to face: on hospital closures, on GP commissioning and, least of all, on funding adult social care, which has been kicked into the long grass. Similar tensions, about what is cost-effective vs what is politically expedient, are surfacing over schools, housing and other policy areas.
With four years – not just four weeks – to get through, Team Cameron-Clegg needs to get a grip on its defences. It should ask some hard questions. Like: how sensible is it, with growth all over the shop, to be talking down the economy and risking a double-dip recession?
The OBR’s 80-page report is notably silent about the impact the chancellor’s retrenchment measures might have on its fiscal projections. But the OBR can forecast all it likes. As Sir Alan himself admits, it’s only taking its ‘best shot at an impossible task’.
The world economy – like the World Cup – has a nasty habit of throwing up the unexpected. And as any pub bore will tell you, you can’t legislate for that.
Judy Hirst is the deputy editor of Public Finance
