Spending cuts not radical enough
Whatever happened to the tough decisions? It could hardly be a tough decision to trim universal benefits for the well-off so spending in universities could be maintained and kids could still get a reasonably priced education.
But it was clearly too tough for the Government. As a result, even if they actually deliver on all their promises to cut spending and stick with it through to 2015, the state will have shrunk only to the size it was in Blair's first administration. Radical, it is not.
The reality is in fact that this squeeze is the same old stuff we had in 1976, in 1982 and in 1993, in other words on each of the previous occasions the government finances tipped over the edge, albeit delivered with more professional spin.
Simon Ward, an economist with Henderson, the fund management group, made that point succinctly enough yesterday afternoon. He noted that “total managed expenditure”, the ultimate measure of spending, would decline by 3.3% in real terms by 2014-15.
Hardly unprecedented. Real spending was cut by 3.9% in a single year in 1977-78 after the IMF rescue. Government spending as a share of total national income will fall from 47.5% this year to 41% in 2014-15, a drop of 6.5%. This is not unprecedented either. That same ratio dropped by 6.5% in the five years after 1982-83. It fell by 5.5% in the five years after 1992-93.
And that is the nub of the problem. We have been here before, and we are doing exactly what we did last time, whereas all the hype and spin had led us to expect that this time it would be different. We were promised reform; we have been given the tired old formula of cuts as usual.
But it was clearly too tough for the Government. As a result, even if they actually deliver on all their promises to cut spending and stick with it through to 2015, the state will have shrunk only to the size it was in Blair's first administration. Radical, it is not.
The reality is in fact that this squeeze is the same old stuff we had in 1976, in 1982 and in 1993, in other words on each of the previous occasions the government finances tipped over the edge, albeit delivered with more professional spin.
Simon Ward, an economist with Henderson, the fund management group, made that point succinctly enough yesterday afternoon. He noted that “total managed expenditure”, the ultimate measure of spending, would decline by 3.3% in real terms by 2014-15.
Hardly unprecedented. Real spending was cut by 3.9% in a single year in 1977-78 after the IMF rescue. Government spending as a share of total national income will fall from 47.5% this year to 41% in 2014-15, a drop of 6.5%. This is not unprecedented either. That same ratio dropped by 6.5% in the five years after 1982-83. It fell by 5.5% in the five years after 1992-93.
And that is the nub of the problem. We have been here before, and we are doing exactly what we did last time, whereas all the hype and spin had led us to expect that this time it would be different. We were promised reform; we have been given the tired old formula of cuts as usual.
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