U.K.’s Spending Plans Bolster Investor Certainty, Alexander SaysScott Hamilton
U.K. spending plans unveiled last week increase certainty for companies to invest, Chief Treasury Secretary Danny Alexander said, as his Cabinet colleague Francis Maude signaled further government cuts.
It’s the “right time to set out the longer-term plans now that we know we’ve got our deficit and our public finances moving in the right direction,” Alexander told the BBC’s “Andrew Marr Show” yesterday. “What I’ve announced is our plans going out to 2020, providing precisely the sort of long-term certainty that investors in the private sector say that they need in order to gear up to deliver the sort of infrastructure this country needs.”
Alexander detailed 100 billion pounds ($152 billion) worth of capital spending planned for the last five years of this decade on June 27, the day after Chancellor of the Exchequer George Osborne set out budget cuts for the 2015 general election year. The government has had to extend its deficit-cutting measures to 2017-18 amid weaker-than-expected economic growth.
“The deficit is coming down,” Alexander said yesterday. “We have got our deficit down by a third. We have plans to continue to get it down. We need to continue the steps to get our borrowing down.”
He said economic forecasts “have not been as they were” because of problems in the euro zone.
“The damage done to our country by the banking crisis has been deeper than we thought,” Alexander said. “It is taking longer. It is a long, hard road that we’re on, but I think we have to stick to that road.”
His comments came as polls show that while Osborne has greater voter support for his handling of the economy than the opposition Labour Party, the ruling Conservative Party trail in public opinion. An ICM Research survey of 2,006 U.K. adults between June 26-28 for the Sunday Telegraph and published yesterday found that 30 percent backed Prime Minster David Cameron and Osborne on the economy, with Labour leader Ed Miliband and his shadow chancellor Ed Balls on 23 percent.
Still, the poll showed public sentiment toward the prospects for Labour increased in the past month. Asked to predict the result of the next national election rather than which party they would back, 34 percent of respondents said Labour would win, up two percentage points from last month. The Conservatives were unchanged at 29 percent and the Liberal Democrats, the junior member of Cameron’s coalition government, were down one percentage point at 15 percent.
A separate YouGov Plc poll for the Sunday Times yesterday found 38 percent of voters would pick Labour if an election were held now, with 33 percent supporting the Conservatives. YouGov, which said support for the Liberal Democrats was at 11 percent, surveyed 1,967 voters between June 27-28.
Neither poll included a margin of error.
On June 26, Osborne set out spending cuts for the 2015 election year, announcing 11.5 billion pounds of budget reductions. The following day, the government announced it will sell off 15 billion pounds of state-owned assets by 2020 to help bring down its debt.
“Last week shows that we continue to be capable of taking the difficult decisions on the economy,” Deputy Prime Minister and Liberal Democrat leader Nick Clegg said in an e-mailed statement. “The Liberal Democrats remain unambiguously committed to the economic strategy; and we continue to recognise that it is our duty to put party differences aside for the sake of the national interest.”
Cabinet Minister Maude yesterday told Sky News there will be more cuts to come.
“In the year to March last year, we took out over 10 billion pounds in efficiency savings,” he said. “What we’ve done so far is identify over 5 billion pounds of similar savings for 2015-2016, but there’s more to come. That’s why we announced as part of the spending review we’re going to be doing this on a continuing basis and there’s definitely more to come.”
Alexander told the BBC that an assessment of the U.K.’s Trident nuclear deterrent system will show that there are alternatives.
“The review was completed two weeks ago and submitted to the prime minister and deputy prime minister,” he said. “While the review doesn’t come to any conclusions, I think when we publish the results in a few weeks’ time, people will see that there are choices available to this country, there are alternatives where we can -- as President Obama said in Berlin last week -- move on from the Cold War postures of the past.”
Alexander said his Liberal Democrat colleagues will not attend Parliament on July 5 to discuss a proposed bill allowing a referendum on the nation’s membership of the European Union.
Cameron has promised a renegotiation of the U.K.’s membership of the EU, followed by a popular vote on whether to stay in the bloc, if his party wins the 2015 election outright. However, he cannot introduce legislation on a referendum because Liberal Democrats oppose it. Instead, Cameron’s Conservatives have published a draft bill to guarantee a vote by the end of 2017.
Alexander said the private member’s bill, which will be steered through Parliament by Conservative lawmaker James Wharton, was a “parliamentary stunt,” and “we’re not going to be there.”