Public spending

Yesterday I asked Mr Clegg to confirm that current public spending will rise 15% in cash terms this Parliament according to government budget plans. I asked him to confirm that this being so the puloic sector need not cut any important public service. It would be incompetence or perversity if it did make cuts in important public services, given the cash increase in spending.

Mr Clegg did not disagree with this view. The view, of course, was not picked up by the BBC. Clearly the increase in cash current spending by governemnt is an inconvenient truth amidst their narrative of deep and damaging cuts. Their journalists should weave this inconvenient truth into their analysis. I expect government Ministers to start explaining what they are doing on public spending a little more accurately, as the government itself has allowed the myth to grow that there will be deep and immediate cuts in current spending which are just not reflected in the budget figures.

The government challenge to those many well paid public sector managers should be a simple one. We can manage modest increases in cash spending – less growth than you are used to. Can you manage things so we do not need cuts in anything that matters? Private sector companies would avoid service cuts if they were sure of 15% more revenue over the next five years, with cash increases each year.

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36 Comments

  1. wab
    Posted September 9, 2010 at 9:27 am | Permalink

    Please be more precise in your claim, and please link to some table or graph in some document on the web where people can check your claim out. Are you including debt interest payments? Are you including both central and local government spending? Is your figure in nominal or inflation-adjusted pounds? How much of the alleged increase is going to be sucked up by social security rather than "important public services" (or perhaps we could say that social security is an "important public service")? If there are to be no cuts, then why are many departments being asked to look at cuts between 25% and 40%? If there are to be no cuts, then why did Cable come out yesterday and tell scientists there will be cuts in the science budget? And I thought Tories actually wanted cuts because they hate government spending and think the government is consuming far too much of the country's wealth.

    Reply: I am clear – total cash current spending which includes debt interest

    • StevenL
      Posted September 9, 2010 at 8:10 pm | Permalink

      It still rises, even when you minus off debt interest, by more than 1% every year. I'm not sure what's going on, but I'd imagine a lot of council chiefs. police chiefs etc would rather that their staff blame Mr Osborne than them. A lot of them have been racking up the ticky too.

    • Lawrence
      Posted September 9, 2010 at 8:48 pm | Permalink

      If you search back through the blog you will find all the figures. Total public spending by HMG (i.e. including grants to Local Authorities) is increasing in cash terms over the next five years. Capital spending is being cut but this is more than offset by an increase in current expenditure. In real terms (inflation adjusted) spending is falling marginally.
      The budget will not be in balance in 2015 and national debt will continue to rise. That is why the Government is keeping interest rates low – to stimulate inflation to try and reduce the burden in real terms. Independence of the BoE is a total sham as they have missed the inflation target for well over a year.

      If only idiot Brown hadn't dramatically increased the amount of index linked borrowing …

  2. Geoff not Hoon
    Posted September 9, 2010 at 9:37 am | Permalink

    Mr. Redwood, The well paid public sector managers we read about have, by and large, never had to manage to CUT costs only to increase them. How they handle the changes needed is already becoming clear in some area's namely just reduce the number of people at the sharp end, leave the overheads as they are and let public dissent at the reduced level of services bring pressure on central government, unions etc. etc. anything to prevent them having to do the job they are paid for but cannot face up to.

    • wab
      Posted September 10, 2010 at 12:49 pm | Permalink

      This is one of the problems with cuts (the world over). The useful stuff gets cut and the fat remains.

  3. Nick
    Posted September 9, 2010 at 9:47 am | Permalink

    No they can't. You need to cut 25% of government spending now.

    You have no mandate for getting me and future generations up the swannee into debt bondage.

    You need to tell the truth, and you, in my opionion, lying by ommission. This is why.

    ie. You are going to screw the public over by taxing them vast amounts more. No doubt you will come along and say that we are not increasing taxation. ie. You're not going to say that the amount of money you pay in taxes is going to go through the roof. No. You will talk about rates. You will ignore the thresholds at which taxes kick in.

    At the end of the day, its the amount of money that you hand over that defines taxation. Something politicians don't want to talk about.

    So if spending increase, and the deficit comes down, that only works is people pay more tax.

    Politics dirty little secret..

    So when you talk about increases in spending, in order to counter the lies of Labour and the BBC, you are also lying by ommission.

    Spending – taxation = Deficit

    Even this is simplistic, because changes in debt is omitted, and the government isn't admitting to its debts. Where is the civil service pensions on the books? Its all dodgy off balance sheet.

    • M.A.N.
      Posted September 9, 2010 at 10:49 pm | Permalink

      Public sector pensions dont exist,only as book/computer entries. Numbers basically, to be paid out of borrowed money. Nice eh?.

  4. woodsy42
    Posted September 9, 2010 at 9:57 am | Permalink

    This is all well and good, and suggests that there should be no panic, essential cuts, or secondary problems created by the loss of jobs.
    Except that I for one WANT SOME REAL CUTS. I want cuts in nonsense jobs like outreach supervisors, multi-ethnic swimming achievement officers, squirrel nutkin equality assistants, all this insulting waste of our money to brainwash the public into PC behaviour and create victim groups. Then I want an end to council grants to fake charities and pressure groups and the end of hyper-salaries to officers and consultants. Then I want cuts in the use of surveilance and of council infringement in our lives, fixed penalties for old ladies dropping cigarette ash and all other stupid and oppressive regulations for which councils have squads of jobsworths and busybodies paid for from our taxes.
    Starting there it should be easily possible to make a very real and significant cut in spending and reduce our tax burden while retaining every essential and important service.

    • Stuart Fairney
      Posted September 9, 2010 at 1:12 pm | Permalink

      Yep, I also want cuts but the truth is writ large before our eyes ~ we won't get it from the Conservatives, much less Labour or the Liberals since they are all selling different brands of the same product ~ patrician statism.

      Anyone else want to vote for freedom ?

    • Chris
      Posted September 9, 2010 at 1:28 pm | Permalink

      I hope the bonfire of the quangocrats planned by Eric Pickles will help cheer you up! This is excellent news indeed. http://www.dailymail.co.uk/news/article-1310304/B

  5. Stuart Fairney
    Posted September 9, 2010 at 10:20 am | Permalink

    The real perversity here is that you and the conservatives see proud of the continued expansion of the state, so the 'choice' is

    1. Labour ~ increase spending
    2. Liberal Democrat ~ increase spending
    3. Conservative ~ increase spending

    At a time of record deficits and this approach does not seem entirely the right one. Next time you do a piece on why the public is disengaged from politics you may wish to ponder if its because you all offer the same old tired statist failure under different colour logos.

  6. Buffer
    Posted September 9, 2010 at 10:26 am | Permalink

    "Mr Clegg did not disagree with (my) view".

    A half truth if ever I read one. Mr Clegg in fact did not grasp your excellent point to any degree whatsoever. His body language made clear that he was striving to produce a neutral reply to a hostile question from a perceived enemy.

    Good luck – and why do you bother?

  7. waramess
    Posted September 9, 2010 at 10:28 am | Permalink

    Carry on as before then? I wonder why we went to the expense of having an election?

    The only difference it would seem is that we now have barristers and journalists leading us instead of barristers and trade union leaders.

    Well, that should be enough to get us out of the mess we are in, shouldn't it?

  8. @pperrin
    Posted September 9, 2010 at 10:38 am | Permalink

    People are hearing the 'cuts' message and believing it. Confidence is declining, business are battening down the hatches or folding.

    And all on a lie.

    All the PAIN (in the private sector) of a cuts agenda, but none of the GAIN of actually reducing our debt…

  9. THE ESSEX GIRLS
    Posted September 9, 2010 at 10:39 am | Permalink

    We suppose that getting Mr Clegg to 'not disagree' at PMQ's was about the best that could be expected.

    We heard him being interviewed by John Humphreys this morning and listening his latest speech as this is being typed. The ‘Well-managed Cuts’ story is still not coming across perhaps because, in this perceived window of Deputy Dog opportunity, he insists on re-telling the entire Coalition history and thesis.
    In interview many chances to reply simply yes or no were neglected in favour of rambling back onto his favourite all-embracing ground.

    If the story is not 25% cuts overnight but 6% x 4 years adding up to a compounded 25% why not find a form of words that says just that?
    If WE are bored by hearing the same re-statements time after time those who don't follow these important matters closely simply switched off weeks ago.

    Come on Mr Clegg and cohorts – try using the simple Redwood story!

  10. Bill Quango MP
    Posted September 9, 2010 at 11:07 am | Permalink

    Somerset County Council are in debt £350 million now, estimated to rise to £400 million. They are talking about 5 – 10,000 job losses.

    "We cannot go on, change is essential," he said.
    "We are bringing a new approach – we will have to stop some services and become a smaller and better run authority.

    Authorities were allowed, year after year, to run up debts. That is the scandal that seems to be missing from the BBC.

    An expensive Park and Ride approved in 2009, when clearly the funds would never be available, and now 1/2 built and abandoned. Plans to update many children's playgrounds, now shelved.
    Authorities were encouraged by government grants and funding from quangos and departments, to spend , spend spend..
    I'm sure every authority has a similar story. The credit crunch came in late 2007. The tragedy is, as Tony Blair said,that the spending taps were not turned off, or at least turned down.
    The scandal is that a weak, unpopular, prime minister, not only demanded more spending, but broke off the taps and pulled the entire sink away from the wall in an effort to try and buy election votes.

    • Simon Clifford
      Posted September 9, 2010 at 2:23 pm | Permalink

      As a matter of record, Somerset County Council only has 6000 employees. What the council leader actually said was that around 1,500 jobs could be lost.

    • StevenL
      Posted September 9, 2010 at 8:26 pm | Permalink

      BQ's got it as usual. But he missed the effect of the pensions deficits. Most councils will plump for JR's preferred method 'natural wastage' so most of the people to go will still be drawing on council spending for years to come.

  11. Lola
    Posted September 9, 2010 at 11:38 am | Permalink

    Capitalism = more for less every day. That is prices of all things decrease over time and everyone gets better off.

    Socialism/Bureacratism (Keynsianism in action?) = Less for more every day and the increase in prices of everything over time. We all get worse off.

    Simples.

  12. StrongholdBarricades
    Posted September 9, 2010 at 11:51 am | Permalink

    How will these spending plans be affected if we do actually have to intervene in any possible financial collapse in Southern Ireland?

    • Stuart Fairney
      Posted September 9, 2010 at 1:09 pm | Permalink

      Perhaps we could send some Scots Protestants to buy up the land cheaply and then move back to mainland UK whilst taking rent but no real interest in Ireland before allowing a Protestant zealot military commander to restore order following the inevitable economic collapse and subsequent rebellion ~ can't see any problems steming from that!

    • James Matthews
      Posted September 9, 2010 at 3:04 pm | Permalink

      Clarify please. Eire is in the Eurozone. Why would we not leave intervention to the Eurozone countries?

  13. NickW
    Posted September 9, 2010 at 12:47 pm | Permalink

    The problem with the NHS is that the customer of a state run health service is not the patient but the Government.. Because of this MPs get preferential treatment and never realise how truly dreadful the experience of (the absence of) health care is for the average patient.
    Two things need changing;

    1) Patient satisfaction has to be the one and only measure of success and the one and only target..

    2) Having a financial model which results in finance shortfalls being addressed by refusing or delaying treatment is in large part the cause of the present disgrace. The money has to follow the patient, and no patients has to mean no money.

    Dan Hannan was entirely right when he warned the Americans that the NHS was not something to which they should aspire, and the Parliamentarians who condemned him for it did so in ignorance of the cruelty, neglect and malice experienced by many patients.

  14. backofanenvelope
    Posted September 9, 2010 at 1:03 pm | Permalink

    Shouldn't inflation figure somewhere in your calculations Mr Redwood. If inflation is currently 3% and it stays there (wildly optimistic), then a 15% rise in cash expenditure spread over 4 years is going to buy a lot less.

  15. APL
    Posted September 9, 2010 at 2:11 pm | Permalink

    JR: "The view, of course, was not picked up by the BBC."

    Past the 100 days mark and still whinging, but not doing anything about the BBC!
    Where is the private members bill to abolish the BBC licence fee?

  16. Richard1
    Posted September 9, 2010 at 2:54 pm | Permalink

    The BBC is running a great campaign right now to look at how the 'cuts' affect 'ordinary people' . No doubt it will draw conclusions favourable to the political left who argue that no restraint at all in the growth of public spending is needed. The current BBC (& Guardian) campaign against Andy Coulson is temporarily occupying the other 1/2 of their 'news' output. Protests sent through the complaints system to the BBC largely go unanswered. License fee payers and tax payers must rely on public figures to point out the inherent bias in their coverage.

  17. Paul
    Posted September 9, 2010 at 3:16 pm | Permalink

    "Authorities were allowed, year after year, to run up debts. That is the scandal that seems to be missing from the BBC. "

    That's because the *!*!"**$* BBC doesn't think there's anything wrong with it. It calls it "investment", even though it's not actually invested in anything, just spent (or more likely wasted). Lefties are apparently unable to grasp that if you 'invest' in something you expect a return.

    If our esteemed Mr Redwood wants to get on the BBC, all he has to do is start a fight over Europe, criticise the Coalition in any way whatsoever etc. They'll have him on in a heartbeat.

  18. LANDLORD X
    Posted September 9, 2010 at 10:08 pm | Permalink

    No sign of any spending cuts in Brent

    This last fortnight Brent has dug up all the speed bumps in the area and replaced them with….new speedbumps…plus some additional ones. It seems that the economy nowadays is being kept going by Govt placing obstructions in the road and then repeatedly changing them. Utter, utter waste. I had hoped that the Tories would cut back but clearly they are far, far too weak. Shame.

  19. THE ESSEX GIRLS
    Posted September 9, 2010 at 10:46 pm | Permalink

    One further thought from today's BBC news…did the Corporation actually commission and pay for the Experian survey on how the 'Cuts' will impact on different regions of the UK?

    The main result reported was that the North East and West Midlands will be hardest hit which is hardly surprising news or even information that can be acted upon. It does not justify being a lead story, let alone a reason for spending license holders funds on such an exercise. Unless they are investigating something important and in the public interest the BBC’s job is to REPORT the news don’t they realise?

  20. RobertPay
    Posted September 9, 2010 at 11:24 pm | Permalink

    I am confused by the narrative on the BBC Radio 4 – I live in New York so it is my main link…every day the lead story on radio 4 is about cuts – the parade of bleeding stumps. However, nearly all my friends resident in the UK have the view that everything is being slashed.

    Can we have some facts and why isn't the government correcting this problem…

  21. grahams
    Posted September 10, 2010 at 12:04 am | Permalink

    They never learn, do they. A few hours after your heartfelt posting, Mr Osborne proudly trailed an extra cut of “several billion” (understood to be £4 billion) in social security spending. Timing and phasing unspecified. This was, I guess, all about internal Government politics. Mr Duncan-Smith’s reforms to sweep away disincentives will initially cost about £3-4 billion extra (which near-fatal flaw rather adds to their credibility), so the Treasury insists on more compensating cuts. Mr Osborne declares that he has won and must be obeyed. Big deal. The message goes out that “they” are planning to bash the poor and old more. Probably just in time for Christmas. By the way, is it just the two new quangos that Mr Osborne has created, or are there more?

  22. Martin
    Posted September 10, 2010 at 8:35 am | Permalink

    Isn't the real problem across much of the public sector the ballooning cost of public sector pensions? This causes an increase in spending while the service provided by that department either stands still or reduces.

    We also have the strange taxation system where those with good pensions pay less tax than a person of working age on the same money and yet also get better benefits.

    Why not make those with pensions of above average earnings pay some extra tax to help fund the generous benefits that pensioners get?

  23. DBC Reed
    Posted September 10, 2010 at 3:09 pm | Permalink

    I would have thought it was par for the course to announce horrific cuts ,then when the time comes introduce much smaller cuts which those affected accept as not as bad as first thought. This was the name of the game in the Thirties I believe.

  24. gac
    Posted September 10, 2010 at 8:41 pm | Permalink

    Tonight (Friday) BBC South East news had a piece about a Deal woman who is being denied new cancer treatment which could extend her life by 2 years or more. The spokesperson for the local PCT (not a clinician I suggest) said that the PCT had limited resources and had to prioritise. From their web site I noted that their allotted spend in the last year was £1.1bn. They are but one of 8 PCT's that operate in the Southeast. When is limited actually limited? And when please can we get rid of this autocratic expensive overhead nonsense?

  25. maxc
    Posted September 11, 2010 at 7:55 pm | Permalink

    The coalition has decided to double our national debt in 5 years. Yep, thanks for that.

    Wouldn't it be nice if politicians were bound to spend in any one year only what they raised in taxes over the same period? In that way, those that wanted this year's level of 'austerity spending' could vote for the 90% income tax, CGT and VAT rates that would be required to fund it….

  26. Lindsay McDougall
    Posted September 14, 2010 at 11:41 pm | Permalink

    In terms of real money (constant 2010 prices) as opposed to cash, public expenditure will be broadly flat. That is why public expenditure will fall from 47.3% of GDP to 39.8% of GDP over 5 years (June 2010 Budget Report Annex C). Always assuming, of course, that GDP grows at a faster rate than over the last 31 years.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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