Labour to slash spending by £15 billion!

Well, they call them efficiency savings, but were it the Conservatives proposing exactly the same thing, Labour would call them cuts.

How much they will affect front line services is difficult to say. You could cut public spending by the actually required £40 billion without affecting public services, the problem is that you would be reliant on those currently wasting money to cut the fat rather than the muscle, and if the could do that, they would be already.

However, there are many points to make about these much heralded ¨efficiency savings¨.

The first is this is a budget announcement, it has been leaked, ergo the chancellor should resign. That is what has happened pre New Labour.

The problem is that New Labour have so cheapened politics that they can get away with leaking budget sensitive information on a regular basis and the client media (yes, the same ones who have now turned on Damian McBride) just lap it up.

The second thing to say is: why have we been tipping £15 billion a year down the toilet? If we assume that this had been going on for 5 years, then had Labour acted sooner, we could have £75 billion more in the bank. Wow, that would come in handy right now.

The third thing to say is that the problem with these cuts is how they are delivered, and more importantly who sets the accounting rules. Government still works on the daft rule that if you do not spend all your budget this year then you lose the money, and you lose the same from next years budget. This is a bean counter rule, and what is more it is a stupid one. If you make reasonable budget assumptions, and beat them you are punished, not only this year but next.

Changing that one rule would dramatically help the public finances. For a start it would mean that there would be budget surpluses.

The last thing to say is that these public spending reductions will not go any where near far enough to reduce public debt. Remember that almost every pound borrowed by the state is a pound less available to the market for every one else.

The BBC has this.