Are the cuts really only wafer thin?
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Eagle Eye
By Ben Chu
Are the cuts really only wafer thin?
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“Move along, nothing to see” says the Spectator editor, Fraser Nelson, with regard to George Osborne’s protestation of “flexibility” this morning on the Today programme.
I’m not so sure. I doubt Osborne would have talked about automatic stabilisers and hinted at the Bank of England’s ability to loosen monetary policy further a year ago when he was unveiling his proudly austere emergency Budget.
But there’s something else about Nelson’s post that I wanted to take issue with.
He argues:
“Departmental spending is set in stone… So in total: cuts of 3.7% spread over four years. The government’s refusal to mention this figure has allowed Labour to make out that the cuts are deep and fast when in fact they average less than 1 per cent a year.”
The idea that public spending is not really being cut by all that much is increasingly popular among some on the right. It has been pushed, at various times, not only by The Spectator, but by Allister Heath of City AM and John Redwood.
But what Nelson is doing in this particular post is conflating government departmental cuts with overall government spending cuts.
Overall government spending might be falling by what sounds like a relatively small degree, but because of rising debt interest, rising welfare bills etc, this translates into a genuinely severe squeeze on individual departmental budgets as this table (extracted from the Treasury by the FT) shows:
Look at the far right hand column titled “cumulative real growth” for the cuts faced by each department by 2015. It shows that education is being cut by 11%, defence by 7.5%, transport by 15%, local government by 27% etc. The average cut for each department is 11%. If you take out the protected departments of health and international development you get an average cut of 19%. And these are real cuts, i.e. adjusted for inflation. So Nelson’s figure of 3.7% cuts over four years in the context of talking about departmental spending is very misleading.
Now you can argue – as Redwood, Nelson and Heath do – that these departmental cuts are necessary, bearable, desirable, or indeed all three. But it’s bordering on dishonest to imply that they’re trivial in scale.
Tuesday 7 June 2011
Are the cuts really only wafer thin? | Ben Chu | Independent Eagle Eye Blogs
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