The Conservatives are dropping their pledge to match New Labour's spending targets during their first three years in office. As an article in the latest British Politics makes clear, if one looked at the small print, the pledge was never that unambiguous anyway and probably only applied up to 2011.
Nevertheless, this is a significant development. George Osborne argues that public spending cuts are necessary to raise in 'shocking' public borrowing. But with the Conservatives enjoying a big lead in the opinion polls, perhaps he feels that the time has now come to give something to Tory activists.
Health, education and international aid are exempt from the cuts, so it is quite difficult to see where the cuts are going to come from. It would be difficult for the Conservatives to cut spending on law and order and defence would presumably also be exempt, given that they seem to be even more assertive liberal internationalists than Labour. Transfer payments (pensions and benefits) are difficult to cut. Scrapping the identity card scheme may not bring immediate savings given the contracts that Labour has signed and cutting back on regional development agency spending would not yield that much.
Osborne is also worried out being outflanked by Vince Cable from the Lib Dems who has called for £20bn of public spending cuts to provide tax cuts for lower and middle-income families. This has not gone down too well with some Lib Dem activists, but Cable probably has a better sense of the political pulse than they do.
Osborne is also not going to push ahead with environmental charges or 'green taxes', arguing that they can too easily become stealth taxes.
Osborne's move does give Labour a possible line of criticism of the Conservatives, although he has tried to cover himself by exempting the most popular areas of public exoenditure.