Questioned on Friday by ConservativeHome, David Cameron dismissed The Sunday Telegraph’s recent suggestion that Oliver Letwin was conducting a new review into public sector waste.  I often read stories that have a detached relationship to reality, was the Tory leader’s response to our question.

ConservativeHome was encouraged by the news at the time but the Shadow Chancellor’s office assured us yesterday that there remained a strong commitment to find economies in the public sector.  We were told that the situation remains as set out by David Cameron in May.  George Osborne remains in charge of attempts to bring spending under control but works closely with relevant colleagues including Oliver Letwin, who oversees the overall policy process.  The Tories are looking to reduce the size of government in three main ways:

  1. Eliminating waste and unnecessary programmes;
  2. Getting better value for money via public sector reform (an issue addressed on CentreRight yesterday by Professor Nick Bosanquet).
  3. A reduction in the long-term demands on the taxpayer by undertaking thorough social reform – including strengthening families, cutting welfare dependency and defeating drug addiction.

We were told that a ‘big bang’ announcement of public sector savings was unlikely.  More likely would be a continuation of one-off announcements where tax reforms would be presented alongside the savings to pay for them.

Speaking at a seminar hosted by the Reform think tank, Shadow Chief Secretary to the Treasury Philip Hammond dampened hopes that actual cuts in overall public spending were possible.  A cut in the overall level of public spending would be “politically extremely difficult".  "I don’t think it’s ever been done for a sustained period,” he continued.

ConservativeHome’s view:
"The Conservative leadership needs to understand that higher taxes to pay for an unreformed state will also be politically extremely difficult.  Although the scale of Labour’s borrowing means that tax rises cannot be ruled out, it is certainly not the case that Britain is under-taxed.  Before we’re willing to accept tax rises from an incoming Tory government we need to be convinced that everything possible has been done to end the misspending of this incompetent Labour government.  [That’s our answer to your reasonable question, Danny Finkelstein]. Again and again the Tory frontbench have talked about "unfunded tax cuts" but everything is unfunded until you choose priorities.  The problem – until recently – has been the Tory leadership’s inclination to prioritise unfunded public spending before unfunded tax cuts.  Surrounded by spokesmen for high spending ministries that’s always where the political pressure is greatest and why the work of The TaxPayers’ Alliance could not be more important."

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