Osborne pledges that spending will be maintained

There has been something of an argument going on in the Conservative Party about whether the party should pledge tax cuts in its next election manifesto. The right of the party thinks that it should stick to its principles and pledge a tax cut. The leadership thinks that such a pledge might alarm the median voter who would ask which services are going to be cut.

The traditional answer is cutting 'waste' and no doubt there is waste in government, but there is no evidence that Conservative governments are any better at cutting it than Labour ones. Scrapping what is likely to be an increasingly expensive identity card scheme would save a lot of money, but after that one would have to start cutting back public services like education and health - and that is not popular.

The right saw George Osborne as 'one of us' but the savvy shadow chancellor has reiterated his pldege to match Labour's spending plans. This is oddly reminiscent of Laboir's pledge in 1997 to stick to the Conservative plans for the first two years of their administration, although the Tories would have actually revised spending upwards. Sensing disllusionment among their supporters, New Labour then moved spending upwards in their second term, arguably at some risk to the public finances.

Now Labour is cutting back its spending, arguably to a level not very different to the Conservative pledge to share the proceeds of growth between public spending and private consumption. The Shadow Chancellor has promised jam tomorrow, examining the next three year spending review due in 2009 in the light of economic conditions and the state of the public finances. That is a useful get out as a Conservative government can always claim that Labour left them in a mess.

In the meantime, the Conservatives can focus their fire on New Labour's decision to take Northern Rock into 'temporary public ownership'. It should be remembered that it was Northern Rock's management that got us into this mess in the first place and taking the company into public custodianship is probably preferable to handing over a lot of public money to Richard Branson. But if they hadn't been so frightened of being accused of going back to the 1970's, New Labour could have taken Northen Rock into public ownership months ago as Vince Cable has consistently argued.