Labour caution paying off
Ahead of next month's election, the Conservatives aim to position themselves as the party of probity and cuts and Labour as the stewards of recovery and investment.
The big theme for the Tories has been the desperate need to deal with Labour's legacy of deficits and debt. David Cameron and his economic spokesman George Osborne, adopting increasingly apocalyptic language, argue that unless the next government starts to bring those debt levels down immediately - a budget is promised within 50 days of taking office - then Britain could lose its coveted 'AAA' credit rating.
The consequences of that, as they paint them, would be an escalation of the interest payments we pay on our debt, which has already reached £42bn in the current fiscal year - more than each of the annual department budgets for the Home Office and Defence.
Labour has been playing it much more cautiously. And, judging from the opinion polls, where the Conservative lead of last autumn has been trimmed from above 20 per cent to 5 per cent, the government's strategy of preserving recovery by postponing big spending cuts and keeping in place the fiscal and monetary stimulus looks to be paying off.
The cuts difference is just £8bn — barely more than an accounting error
But while it plays well in the polls, Labour's spending plan is not quite what it says it is. Close study of the 228-page 'Securing the recovery' Budget 2010 document shows that Labour is also contemplating savage cuts - although it declines to specify when and if the axe will fall.
The Chancellor, Alistair Darling, who has now been publicly assured by the Prime Minister that he can stay at Number 11 Downing Street after the election, already has blurted out that Labour cuts will be "deeper and tougher" than Baroness Thatcher's of the 1980s.
Darling has an endearing habit of telling the truth and slightly regretting it afterwards. At the end of the summer of 2008, he predicted the worst recession in 60 years - only to find the "forces of hell" unleashed upon him by the spin doctors at Number 10. The Chancellor's forecast, however unpalatable it may have been, proved to be right, with output plunging 6 per cent in 2009 as the economy went into a nose-dive.
The reality is that, when it comes to budgetary policy, there is very little to choose between the two parties. Both Labour and the Tories recognise that the deficit and debt have to be dealt with. And both have ring-fenced the NHS and international development budgets. Labour has also said it will protect schools.
So the assault on spending all looks to be a mere matter of timing. The Conservatives say they will eliminate the "structural deficit" - that is the cash shortfall after investment is stripped out - by the end of their first Parliament. Labour argues that it will halve the deficit by 2014-15.
Analysis by the Institute of Fiscal Studies, the most authoritative voice on budgetary matters, points out that the decision to ring-fence the NHS (which will spend £104bn this year) and other smaller areas of spending means savage cuts elsewhere.
In the years 2011-12 the implied cuts in the other budgets, from the home office to social spending, would be 7.1 per cent a year. If the ring-fencing were to remain in place until 2014-15 (the period dealt with in budget documents) then the cuts could be 25 per cent.
Capital spending on everything from road maintenance to new rail links, schools and hospitals would likely be hardest hit.
So much for the all the earnest debate and about third runways at Heathrow and a new super-fast rail link between London and Birmingham.
What is also evident from the number crunching is that, despite all the dire talk of cuts by the Tories, the fiscal ambitions of the two parties, as they have been spelled out, are not very different.
By the end of the forecast period, the difference in the cuts is just £8bn. That could be the accounting error in the public finances in few single months.
Cameron and the Tories also have a further problem. They intend to make one of the centrepieces of their campaign a promise to lift one of Labour's stealth taxes - the decision to raise national insurance contributions (NICs) on employers and employees by one per cent starting in April 2011.This is intended to raise £9bn in revenues over two years.
Cameron and Osborne portray this as a tax on jobs and want to eliminate it. But to do so would open a new black hole in the budget.
Ideally, the Tories would also like to end the 50 per cent tax rate which starts on April 5 for people earning over £150,000 a year, which they believe is part of the politics of envy (rather than fairness) which has been a feature of Labour's post-crash budget statements.
But given the promise already made to lift the threshold for inheritance taxes to £1m - a policy seen to favour the rich - Osborne and his advisers reckon the 50 per cent tax rate will have to remain in place for the time being.
This despite fears in the business community that it could lead to an exodus of the some of the nation's most impressive executives.
In any election which takes place against a background of slow growth and daunting debt legacy, what the Americans call "pocket book" issues are certain to take centre stage.
Labour has decided to play the optimism card, looking forward to speedy recovery next year, to lead the country back to the sunny uplands. But it is a forecast that does not stand up to independent scrutiny.
Alex Brummer is City Editor of the Daily Mail