The Conservatives may have to start charging for NHS services or raise VAT if they win power because George Osborne’s plans to slash public spending are unachievable, shadow chancellor Ed Balls has said.
He issued the warning after calculating that the Tories’ plans would mean £70bn of cuts to public spending in the next parliament – more than double the amount admitted to by David Cameron and the chancellor.
Balls said such proposals would entail a police force smaller than when records began in the 1970s, an army of a size not seen since the days of Oliver Cromwell and 250,000 older people losing their social care.
He called on Osborne and Cameron to spell out how these cuts would be achieved or admit they could have to charge for the NHS, slash health spending or raise VAT.
Grant Shapps, the Conservative party chairman, dismissed the dossier produced by Balls and Labour as nonsense, saying it was worked out on the back of an envelope and full of “wild figures and accusations”.
Tory sources said that Balls did not believe his own claims about the likely impact of Osborne’s spending cuts on public services.
However, Paul Johnson, director of the Institute for Fiscal Studies, told BBC News that a figure of £40-70bn was “not difficult to come by” when looking at the Conservative plans if the ambition for a surplus to fund tax cuts is taken into consideration.
He said: “I don’t think it’s very useful to worry about whether we’re talking about £30bn or £40bn or exactly what the £70bn number means. I think there is a clear choice for the electorate though, a choice between one party which is talking about further significant cuts after next year and another party which is talking about much less significant cuts and more comfort about borrowing to invest.”
A Conservative backbencher, Charles Walker, told the BBC’s Daily Politics that he was not sure he agreed with the idea of ringfencing NHS spending.
Osborne has not responded directly to the dossier and will be absent from the last Treasury questions this parliament in the House of Commons because he is at a meeting in Brussels.
On discovering that Osborne will not be in parliament, Balls fired off a letter to the chancellor further demanding “honesty and clarity over your extreme and risky plans”.
He asked: “Will you proceed with £70bn of cuts, which will have an unprecedented and deeply destructive impact on non-protected departments, or do you in fact plan to cut the NHS?”
Balls said that since 1945 only seven countries in the developed world for which there was available health spending data had attempted reductions on the scale of Osborne’s plans. Across these examples, public spending on healthcare had been cut by 1% of GDP on average.
The shadow chancellor added: “This is the implication of the choice that George Osborne made last December, and which he is now trying to brush under the carpet.
“If he is to deliver on his autumn statement plans for a £23bn overall budget surplus, as he says, through a budget with no fiscal loosening, while promising unfunded tax cuts in the next parliament, then he is going to have to deliver these colossal cuts.
“The evidence is clear: countries which reduce public spending at the pace George Osborne intends have found they have had no alternative but to cut health spending.”
Balls said Labour’s plans would involve sensible spending cuts in non-protected departments. He said the party’s goal was to cut the deficit every year and balance the books – with a surplus on the current budget and national debt as a share of GDP falling – as soon as possible in the next parliament.
However, he shied away from giving a ratio of cuts to tax rises, or saying exactly how Labour would meet its spending reduction targets.
The shadow chancellor said two examples of his planned cuts were taking away winter fuel payments from the richest 5% of pensioners and capping child benefit rises at 1% for two years. He added that other efficiency savings had been set out in the party’s “zero-base review”.
Asked whether he was scaremongering about the Conservative plans, Balls said Labour’s warnings that the Tories would close Sure Start centres, raise VAT and reorganise the NHS had come true after the last election.
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