The spending increases

Today the government is announcing one of its spending increases – £7 billion extra over four years for education. I expect when we see the total schools’ budgets we will see they will avoid cuts this Parliament.

We should also expect to see increases in the Health budget, as promised. The pensions budget will rise more quickly than before, now pensions are linked to wages not just prices. Maybe overall the whole welfare budget will rise as benefits go up with prices. The debt interest budget will of course rise as the country carries on borrowing more and more. This week we learnt that the EU budget is planned to rise by 5.5% unless the UK government can get that changed. The Overseas aid budget will increase.

Other commentators are coming round to my view that total current spending will rise every year this Parliament in cash terms, and may rise in real terms if the Bank gets inflation under control as it is obliged to do. As the largest programmes of Welfare, Health and Education are seeing increases it is not surprising that overall there will be an increase.

The latest work by the CPS pursues this theme. They add capital spending in to the totals, which does reduce the growth rate as capital spending is being cut quite heavily.

Today I read that the Adam Smith Institute has come up with £90 billion of possible asset sales for the government. A bigger asset sales programme would be a good idea. The receipts would reduce the amount the government had to borrow, and therefore reduce the rate of increase in the amount spent on debt interest. It would also be a good idea to get the taxpayer out of the risky business of banking, and get our money back from past taxpayer support operations.

7 Comments

  1. Javelin
    October 15, 2010

    I posted a couple of months ago that if George Osborne was to rely on Inflation to get himself out the budget crisis then the City would view him as "chicken" – out in Canary Wharf last night the consensus amongst traders from 4 banks was that he hasn't done enough to prevent a credit downgrade. Sorry George.

  2. Brian Tomkinson
    October 15, 2010

    We shall have to see what is announced next week but I am increasingly sensing that all the tough talk about spending cuts is just talk. As usual politicians will continue to waste more and more of the taxpayers' money. Whatever happened to the idea of the smaller state? Even you, John, seem to have become a defender of profligate government spending. You have highlighted that cash spending is increasing but offered no criticism of the fact.

    PS What is happening to this site? I have recently tried to log on several times and the same but completely obscure website appears.

  3. Brian Tomkinson
    October 15, 2010

    We shall have to see what is announced next week but I am increasingly sensing that all the tough talk about spending cuts is just talk. As usual politicians will continue to waste more and more of the taxpayers' money. Whatever happened to the idea of the smaller state? Even you, John, seem to have become a defender of profligate government spending. You have highlighted that cash spending is increasing but offered no criticism of the fact.

    Reply: I have recommended additional cuts – as with the EU budget

  4. GJWyatt
    October 15, 2010

    Asset sales may reduce the debt but they don't affect the deficit – the primary deficit, that is. Sure, the reduced debt means reduced interest payments, but the big problem is ongoing government current spending and transfers. Your blog sometimes reads as if you are happy that it is set to rise in nominal terms throughout this parliament.

    Reply: I am just trying to describe what is actually happening, instead of all the misleading spin in the media. I have identified various areas where I want less governemnt and less spending.

  5. AlteFritz
    October 15, 2010

    Yet all the public will hear is that health and education are suffering cuts. There is a propoganda war to fight here, and if it is true to say that such spending will increase, no effort must be spared to get the message through. The government needs to learn that lesson from Mr Blair.____Turning to defence, last night I heard a Territorial officer describe how he was grateful to be able to accept help, in the form of scrounging supplies, from the US army in Afganistan whilst on a tour of duty last year. It seems that our supply chain remained shambolic and the US knows how to look after its boys. The supplies in question were for the Engineers, so this goes to maintaining the infrastructure from which the army must fight.

  6. simon
    October 15, 2010

    Perhaps there is a case for these national assets to be held by a board of trustees other than the house of commons .

    I disagree most strongly with flogging off the family silver .

    It's just a way of transferring our childrens birth rights into the hands of their masters .

    The fact that they will be getting it at market bottom prices is just insult to injury .

    It's not dealing with the causes of the deficit , it's dealing with the symptoms .

    Basically cheating at our childrens expense .

  7. David Jones
    October 15, 2010

    I think you need to have a word with your partners in govt., John. Clegg's announcement smacks of Gordon Brown as does the 'reduction' of quangos. If Universities are having to take a cut why spend an extra 7 bn (unfunded) that a radio Liberal answering this evening refused to say where it was coming from. We really need proper up front govt after 13 years of spin and downright lies. I get the impression that this has been missed by the Coalition and I believe they are very quickly going to suffer for it.
    Retired DCJ

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