There are two groups of parties fighting the election: those who think the time for austerity is over and those who think it has to continue into the next parliament. The SNP and the Greens are in the first camp. Labour, the Conservatives and the Liberal Democrats are in the other.
The Liberal Democrat manifesto makes it clear that the austerity will come first before making way for the commitments to spend more on the NHS, including mental health, and education later in the parliament. Voters are being offered jam tomorrow rather than jam today.
That’s because the first two years of the next parliament will be spent on deficit reduction. The Liberal Democrats are promising to eradicate the structural part of the UK’s current budget deficit by 2017-18.
Stripped of the economic jargon, that means the bit of the annual deficit on the day-to-day running costs of government that won’t disappear even when the economy is fully recovered from the recession of 2008-09.
The Lib Dem pledge is less tough than that made by the Conservatives, who are planning to run a surplus on both current spending and investment spending. That’s why the Lib Dems are able to oppose Osborne’s plans for £12bn of welfare cuts. But the Lib Dems are being tougher on the deficit than Labour, which has plans to balance current spending at some time in the next parliament.
Does that mean the Lib Dem sums add up?
Probably, although it is a bit hard to say. It will depend on how much of the UK’s current deficit is considered structural by the independent Office for Budget Responsibility, with estimates liable to change over time. It also depends on whether the economy does better or worse in the coming years than is currently forecast.
But the Lib Dem pledges are relatively modest. In his last budget, George Osborne said the personal allowance would be raised to £11,000 in 2017-18, and it would normally be raised in line with inflation in the years after that. It will not be as expensive a jump as it looks to get to £12,500.
Moreover, the Lib Dems have left themselves some room for manoeuvre. The pledges to raise the personal allowance to £12,500 and to increase funding for the NHS are for 2020, which means that in theory the Lib Dems could wait until the end of the parliament before delivering on them. In practice, this is unlikely because funding pressures on schools and hospitals are increasing all the time.
