February 14, 2013 6:14 pm

Treasury minister warns against ‘fiscal nimbyism’

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Danny Alexander, the Treasury minister charged with finding another £10bn in spending cuts, has warned colleagues against “fiscal nimbyism” as he searches for new savings across Whitehall.

Speaking ahead of bruising coalition negotiations on the next public spending round, the Liberal Democrat indicated he was tired of hearing Tory colleagues urging fiscal restraint but opposing cuts in their own departments.

“We can’t have any fiscal nimbyism,” he told the Financial Times. “Just because you take a strong position in favour of deficit reduction does not mean that you can then protect your own spending.”

Theresa May, home secretary, Chris Grayling, justice secretary, and Philip Hammond, defence secretary, have argued that savings for the crucial 2015-16 spending round – covering election year – should come instead from welfare cuts.

But Mr Alexander made it clear the Lib Dems believe welfare cuts have gone far enough and that the savings needed to keep the coalition’s deficit cutting plan on track had to come from departmental budgets.

“We made our decisions in the autumn statement on welfare and on tax,” he said. “We had a lot of discussion about it. We took some very tough decisions – not least increasing an awful lot of benefits by less than the rate of inflation for a number of years.”

Mr Alexander said the aim was to complete the spending review – the last detailed set of cuts before the election – by the end of June, to be implemented in the year starting in April 2015, just weeks before scheduled polling day.

The Treasury chief secretary has become so wedded to implementing the coalition’s Plan A that he is seen by some on the left of his party as a stooge to the chancellor, George Osborne.

Vince Cable, the Lib Dem business secretary, has argued that borrowing should be allowed to rise to fund capital investment, but that idea is opposed by Mr Alexander.

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George Osborne

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Indeed, the “fiscal nimbyism” tag is almost certainly aimed partly at Mr Cable, who told the FT this week that the Treasury should keep its hands off key parts of his budget, including skills, science and business support.

Mr Alexander made it clear he would do all he could to protect science spending, arguing: “We see science as something which is a very powerful driver of economic growth. It’s an area of comparative advantage.”

He insists the government’s capital programme is on course, but says that additional public investment in infrastructure must come from savings on day-to-day spending, not higher borrowing.

Key to the policy is the delivery of big projects helped by up to £40bn of government guarantees, intended to leverage low UK borrowing costs to underwrite construction risk. Despite criticism that many projects are stuck in the development stage, Mr Alexander insisted: “I’m content with the progress we’re making.”

The chief secretary this week attended a pre-Budget get-together with Mr Osborne and Treasury staff at Dorneywood, the chancellor’s country residence, and makes clear the Lib Dems have one overriding priority for the March 20 statement: raising the personal tax allowance.

“We’re pretty close to the £10,000 mark now – I want us to get as close to it as we can in this Budget,” he said.

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