Britain's new government will launch an independent audit of public spending next week, Prime Minister David Cameron said on Sunday, as several senior cabinet members expressed concern about budget 'black holes.' Tackling a record budget deficit running at more than 11 percent of GDP as the country makes a so far anaemic recovery from recession is the major challenge for the government.
Cameron's centre-right Conservatives joined forces with the smaller centre-left Liberal Democrat party after a May 6 parliamentary election to form Britain's first coalition since 1945 and end 13 years of Labour Party rule.
Cameron, who said the government would publish a detailed coalition agreement within the next two weeks, reiterated that action to cut the deficit should focus on spending cuts rather than tax rises. "We will have a proper independent audit by the Office of Budget Responsibility of the black hole that we face," Cameron said in an interview with BBC TV, adding the audit of spending would be launched by finance minister George Osborne on Monday.
The Sunday Times newspaper said several ministers, including Liberal Democrat Business Secretary Vince Cable, had expressed concerns about the true state of the public finances after finding black holes in their departmental budgets.
"There are some worrying early signs that numbers left by the outgoing government may not add up," the paper also quoted Cabinet Office Minister Francis Maude as saying. "It certainly doesn't make the task of reducing the structural deficit any easier." The two parties set out an initial coalition agreement on Wednesday, covering decisions in key areas such as the economy, and subjects on which they have radically different views such as immigration, defence and Britain's relations with Europe.
"We need a fuller coalition agreement covering other policy areas as well," Cameron said on Sunday. "There will be a longer form document out in the next couple of weeks."
Cameron's coalition partner, Liberal Democrat leader and Deputy Prime Minister Nick Clegg, faced a special conference of party members on Sunday where the agreement, which many activists feel involved the party abandoning its core values, will be debated.
While the vote, which comes as two polls suggested some Liberal Democrat supporters had switched to the opposition centre-left Labour Party, is unlikely to have an immediate impact on the coalition, a lack of endorsement from the wider party would embarrass Clegg and could raise questions about its longevity.
Former Liberal Democrat leader Charles Kennedy wrote in the Observer newspaper he had not backed the deal as he was concerned the party would lose touch with its fundamental values and be swallowed up by the Conservatives. Cameron insisted the Liberal Democrat would play a central role in government and while he acknowledged both parties were likely to lose some supporters as a result of the partnership, he said the coalition's actions would prove it was the right decision. "If we can demonstrate that we are gripping the deficit, that we are succeeding in Afghanistan, that we are solving the country's social problems then that is the best way of proving to either a disillusioned Conservative or a worried Liberal Democrat that it is a good thing," he said.
Asked about speculation the government would raise the Value Added sales tax by 2.5 percentage points to 20 percent, he said it was not something they planned to do but a decision would have to wait for an emergency budget due in the next few weeks.
In a sign of his intention to rein in spending on public sector pay, Cameron - whose cabinet this week agreed to a 5 percent pay cut - said bonuses paid to senior civil servants and health service managers would be reduced by two-thirds for 2010/11, saving around 15 million pounds. "From the large to the small, we are going to take action," he said.