Delaying the cuts

Put aside all the post-match analysis of David Cameron’s speech: the most intriguing story in the papers this morning is this one in the FT. It claims that the Treasury is working on plans to “reprofile” the spending cuts, which basically means “delay” them. The idea would be to push the bulk of the cuts back to the end of this Parliament. And the underlying concern is, apparently, that early cuts could trigger various financial penalties, such as those for breaking contracts. The paper even suggests that ministers are worried that, “deep deficit reduction in 2011-12 could undermine the fragile recovery.”

The Treasury have firmly denied the story, and I’d certainly be surprised if we saw significant delays in the cuts. For starters, it would undermine the coalition’s argument just as they’ve hit on a good one: that paying out £120 million a day in debt interest payments is a moral, as well as a fiscal, failure. And it would also be a gift for Labour and their new shadow chancellor. Ed Miliband & Co. would be able to claim, albeit disingenously, that the coalition had followed their advice to restrain the axe – and that a double-dip had been avoided for that reason.

But I suspect that the FT story does reflect some concern about the cuts along Whitehall – not so much about their scale, but about their practicability. Some civil servants mutter that the various “efficiency savings” and “administrative costs” may not add up to all that, or may take a while to seep through the system. The end result, they claim, may be lower cuts in practice than the Budget accounted for in theory.