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'Smallish' cuts to come - Alexander

The UK must "stay the course" on efforts to reduce the deficit but up to three-quarters of the austerity measures necessary have already been set out, Danny Alexander has claimed.

The Treasury Chief Secretary, speaking on the eve of George Osborne's setpiece Autumn Statement tomorrow, said "several tens of billions" more savings were needed to eradicate the deficit by 2017/18 but it was a "smallish" effort compared to measures already announced.

The run-up to the Autumn Statement has been dominated by forecasts that the Government will fail to meet its borrowing targets, in part because of lower-than-expected revenues from tax.

Mr Alexander, the Chancellor's Liberal Democrat deputy in the Treasury, said it was essential to "finish the job" of repairing the country's finances after the general election.

Speaking at the Institute of Civil Engineers in Westminster at the launch of the National Infrastructure Plan, containing details of £466 billion of privately and publicly-funded schemes, Mr Alexander said the investment would not be possible without keeping control of the nation's finances.

He said: "In this parliament we have made decisions on public expenditure right the way through to the end of the year 2015/16. That's overall decisions on deficit reduction that amount to about £120 billion, so it's a significant effort we are making to try to get the country back on the right track."

But he warned: "There will be further work to be done on completing the job, finishing the job of eliminating the structural deficit. That will be several tens of billions of pounds more.

"But in the context of what we have done so far this parliament, it is a further effort but it is a smallish - it's maybe another third or so, a quarter of that effort that needs to be carried on in the years up to 2017/18 which is when we have said we want to eliminate the structural deficit by.

"In a sense, as a country we have to finish that job, it's the work that is underpinning the strong economic recovery we are seeing - we are seeing the strongest economic recovery in the UK anywhere in the European Union.

"So we have to stay that course. To deviate from it would be to undermine one of the foundations of the economic recovery that we have been seeing."

Mr Alexander's assessment of the scale of the effort needed in the next parliament was in marked contrast to the independent Institute for Fiscal Studies, which has estimated that spending cuts after 2015 will be of a similar scale to those achieved by the election.

The respected think tank expects spending to fal l by about £28 billion over the next parliament, compared with about £23 billion of spending cuts which will have been implemented by May 2015.

Answering questions from journalists, Mr Alexander rejected the suggestion that the "low hanging fruit" had been picked and future cuts would be tougher to make.

He said: "I would say every one of these decisions, right through this parliament, has been tough...

"The decisions we take affect the taxes people pay, they affect the money that is spent on the public services people consume, they affect people's jobs and the payments they receive from Government.

"So every single one of those decisions is tough and needs to be thought through very, very carefully and the same will be true in the next parliament.

"One of the things I hold particularly strongly to is the idea that the job has to be finished in a fair way, where every group in society continues to make a contribution to finishing the job of deficit reduction.

"Each party will have to set out its own views about how we go about doing that in their election manifestos."

David Cameron has been rebuked by a statistics watchdog for his claims about the scale of austerity measures still required.

In an article in The Times on October 30, the Prime Minister said: "In this parliament we will have made £100 billion of savings while cutting income tax by £10.5 billion. In the next parliament we plan to make £25 billion of savings while making £7.2 billion in income tax cuts."

But UK Statistics Authority chairman Sir Andrew Dilnot, responding to a complaint from Labour, said: "The figures for 'savings' during this parliament and the next parliament are drawn from different sources, are derived in different ways, and so are not directly comparable."

He said the £100 billion figure was for the anticipated spending consolidation from the start of the parliament to 2015/16.

" This is the government's estimate of the amount by which it has reduced public expenditure compared to a baseline - or counterfactual - that it inherited in 2010.

"It is based on a series of assumptions about increases in public expenditure under an alternative, hypothetical set of Government policies."

He added that " much of the financial year 2015/16 falls in the first year of the next parliament so a proportion of the £100 billion figure does not relate to the current parliament".

In his reply to shadow chief secretary Chris Leslie, Sir Andrew said the £25 billion figure was the difference in the Office for Budget Responsibility's forecast of total managed e xpenditure, excluding central government gross debt interest, between 2015/16 and 2017/18, expressed in estimated 2018/19 prices.

Tory big beast Ken Clarke told the BBC's Newsnight George Osborne's original plan of eradicating the deficit by May 2015 would have left the country "in a bad way".

He also suggested the revised target of balancing the books by 2017-18 may not be met, and urged the Chancellor not to rule out tax rises after the election.

"We had a target of getting rid of the deficit in this parliament. I actually think that although it perhaps wasn't entirely planned it was very sensible that we didn't do it that quickly," Mr Clarke said.

"Had we tried ... getting rid of the whole deficit, 'let's charge ahead', we would not be in the state we are. We would be in a bad way."

Mr Clarke, who recently stepped down from the Cabinet, said the 2017-18 deadline was a "legitimate target".

"I would aim to do it, get rid of the deficit by 2017-18. We should try to hit it but we should not be oblivious to the fact that nobody knows what the state of the world economy is going to be in 2017-18," he said.

He also insisted he "wouldn't shut out" the possibility of tax rises. Labour has been accusing Mr Osborne of secretly plotting to increase VAT. "Has George really ruled out any kind of tax rises? I wouldn't personally if I were him burn my boats on that," Mr Clarke said.

"I would very much like to avoid tax rises, because it's actually advantageous to growth at the moment. Taxes sometimes go up, sometimes go down. It's reacting to the reality and events. George is good at that."

Mr Clarke said the current levels of public spending would have been regarded as "ridiculous" in past decades.

"I think the totality of public spending, I think we're down to 2003 aren't we? We're not down to the levels I was used to," he said. "We're spending sums of money that I would have told you were ridiculous not too many years before that."

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