In a Daily Telegraph interview, Chris Huhne suggests that the proposed spending cuts are not "lashed to the mast" and that it "may be appropriate" to alter the plans in the event of a serious economic downturn. The Energy Secretary – who admits that a double-dip recession is a possibility – also attacks David Cameron’s pledge to offer married couples tax breaks in the wake of the row over the removal of child benefit for higher earners.
His comments indicate that if Britain re-enters recession, as some economists predict, Mr Huhne and his Liberal Democrat colleagues may put the Conservatives under pressure to reduce the cutbacks, the most substantial since the end of the Second World War. Mr Cameron and George Osborne, the Chancellor, have repeatedly stressed that government departments must push ahead with cuts of up to 40 per cent as Britain struggles to repay record public debts. However, following a reduction in economic growth, Labour has accused the Coalition of endangering the recovery.
The intervention of a senior Cabinet minister, who sits on the Government’s "star chamber" overseeing the cuts, comes at a sensitive time for the Coalition. Ministers are currently locked in negotiations with the Treasury over their spending plans and the Government will publish details of the Comprehensive Spending Review on Oct 20. In today’s interview, Mr Huhne indicates that the plans may have to be revised to reflect the economic situation. He says that if the economy grows more strongly than expected this could also lead to a change as such sharp cuts will not be necessary. He adds that he is not "lashed to the mast with a particular set of numbers".
"It is a bit like setting sail," he says. "If the wind changes, you have to tack about to get to [your destination]. Global growth could be either higher or lower. We just don’t know, and it’s not sensible, outside the Budget period, for governments to make speculations about what is going to happen.” Mr Huhne, an economist [yes, it surprised me too – Ed], says that he does not consider a further economic downturn to be "likely", but warns that a double-dip recession is "not impossible". Last week, the Prime Minister refused to be drawn on whether the Government would change its public spending plans in the event of a double-dip recession.
Mr Huhne also casts doubt on one of Mr Cameron’s most cherished policies – rewarding marriage in the tax system. The Liberal Democrat says he is "very sceptical" and if the policy is "basically flag-waving, then frankly it’s probably not something that the Government ought to be doing". Ministers are in one of the most frenetic periods of activity ever undertaken by a peacetime government in the run-up to the comprehensive spending review. All departments, except health and international development, will have to agree to cut their budgets by between 10 and 40 per cent.
Next week, a number of reviews will be published setting out ways of cutting government spending. Ministers will also unveil details of the proposal to privatise the Royal Mail. The following week, the Government will publish its defence review and the spending review itself. The fallout is expected to test the resilience of the Coalition as Lib Dems and Tories disagree over key areas of spending such as defence and universities.