Scratches, not cuts

Read in the shadow of yesterday's statement from Moody's, the PBR's lack of substantive expenditure savings is worrying. Not only are the measures of fiscal restraint rather ill defined and optimistic ("£10-12 billion in the NHS budget by 2013"), they fail to really reassure taxpayers and voters that tough decisions are being made to reduce the deficit.

Pain does fall on the public sector work force. They face the toughest pay settlement for a decade. No serious attempt to deal with the deficit could avoid such moves, and the proposals for public sector pensions are a positive step in terms of correcting the UK's long term structural deficit. The unions have already made clear that they will oppose these plans, but the Government's 'deficit reduction' credibility depends upon their seeing such proposals through.

But freezing pay will not arrest the steady slide into indebtedness. Actual programmes need to be considered in the light of the public finances. Unfortunately, the specific measures laid out the PBR ( those not 'efficiencies' or 'from general budgets' proposals) amount to little more than scratches; cuts would be far to generous a term. All the same, those scratches, written in the dry text of the PBR, lay the ground for some interesting future skirmishes with some very vocal groups.

Take the proposed cuts to the Department for Culture, Media and Sport. Of all the Departments, this is the one affected by the PBR. With more than 90 per cent of its spending distributed through its quangos, the plans to 'rationalise' non-museum bodies will - if actually enacted - will see the department shrink considerably, with 'arts' budgets most likely to be squeezed (as the Olympics provides some shelter for sports). 

Perhaps more distressingly, the "£600 million" to be saved from "higher education" is likely to be found in those research council budgets that fund ground-breaking science in our universities. The science on which innovative patents (which the Government wants to see more of) depends.

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