Redwood: Plan A vs Plan B?

Various economists and critics of the government are demanding a Plan B. Just one year into a five-year plan of deficit reduction and growth they are worrying the growth rate is slowing.

They say this means we need another option, with more public spending and public borrowing than Plan A. They do not seem to realise the Chancellor is following just such a strategy. I have explained before that the five-year plan rests on tax revenues being £172bn higher in 2014-15 than in 2009-10. It is this extra tax revenue which brings the deficit down. Total public spending is planned to be £75bn a year higher, and that could involve real term cuts if public sector costs rise too fast, but there is a two-year pay freeze which ought to help control them. The government als...