“TODAY, we take decisive action to deal with the debts we have inherited.” So declared George Osborne, Britain’s chancellor, in 2010 when announcing his plans to close Britain’s structural budget deficit by 2015. He did indeed take decisive action, but it did not deal with the debts. When Mr Osborne delivers his final Autumn Statement of this parliament on December 3rd, he will be less than half way to achieving his goal. The problem is no longer growth, which is roaring ahead at an annual rate of around 3%, nor spending cuts, which have largely gone to plan, but income-tax receipts. They were meant to grow by £11 billion this financial year, but have managed only an eighth of that. That’s mostly because many higher-paying jobs have been replaced with lower-paying ones, and tax cuts for low earners have therefore left the Treasury short. As a result borrowing, which was meant to fall in 2014-15 from £108 billion to £96 billion, has risen by £4 billion and debt will grow as a percentage of GDP this year. At 5.3% of GDP, Britain’s deficit is bigger than those of France, Italy and even Greece.

It doesn’t add up

The Conservatives’ latest plan is to deliver a surplus by 2020. David Cameron, the prime minister, says that if the Tories are re-elected next year, they can do this easily in the next parliament and cut taxes by £7 billion to boot.

This is nonsense. Mr Cameron is fiddling the figures by comparing different measures of spending and inexplicably excluding cuts at either end of the next parliament. Closing the deficit by 2020 would require cuts to government departments of roughly equal size to those already imposed.

Such cuts would needlessly put the recovery at risk when global growth is slowing and interest rates are pinned near zero, and would further savage departments that have already suffered. A ring-fence protecting health, schools and foreign aid shields a third of spending from cuts. Departments outside the ring-fence—such as justice, transport and defence—have already seen average real-term cuts of 15% since 2010. A further 21% cut is required between now and 2020 to balance the books (see article). And as the easiest cuts have already been made, the Tories’ plan is tougher than the numbers imply.

The good news is that Mr Osborne’s plan is tighter than necessary. The chancellor wants to balance the entire budget, including both day-to-day spending, such as public-sector salaries, and investment spending on infrastructure and capital projects. But investment spending is special: it often pays for itself by producing assets such as roads or research labs which contribute to productivity and growth. Exempting investment from the target—as advocated by the opposition Labour Party—would obviate the need for £28 billion of cuts (about 4% of all spending). Total British investment—public and private—is the lowest in the G20. Beginning to rectify this would hardly cause a crisis; it would probably be welcomed by the bond markets.

This still leaves a £56 billion gap to close. Instead of massacring services or welfare, the government should trim state pensions, which are up 14%, or £1,100 a head, since 2010.

The British state pension is not large by international standards, but the payment—£11,800 a year for a couple—is nearly twice what a jobless working-age couple gets. Under its particularly generous uprating formula, the proportion of national income that it consumes will increase, for the so-called “triple-lock” means they rise by the rate of inflation, wage growth or 2.5%—whichever is highest. And pensions go to the poor and wealthy alike. For the top fifth of pensioner households, who have an average private income of £65,000, the state pension pays for holidays and golf-club fees.

The state pension’s defenders argue that cuts are unfair as retired people have saved via past tax contributions. This is a myth. Working people’s taxes pay for pensions, so young couples earning £28,000 are paying for oldies on £65,000. Ending this anomaly by withdrawing the state pension from the top fifth of retirees, while abolishing the triple-lock and capping rises to 1% for two years (the treatment Mr Osborne has already given working-age welfare) would save £18 billion by 2020, and mean cutting only 11% from non-ring-fenced departments.

Britain’s fiscal problems are partly the result of over-generous spending on the old. They should pay off some of the debts instead of passing them all on to the young.