Public spending – the longer perspective

Most of the time Labour wrongly claims Conservatives cut spending. Maybe Labour claims are an appropriate topic on April Fool’s day.  These claims usually become more extreme and absurd at election time. I thought a few facts might help inform the debate.

Throughout the Thatcher years in office, 1979  to 1990, Labour claimed  the Conservatives  were making deep cuts. Total managed expenditure was £315bn in 1978-79, the last Labour year (in 2007-8 prices). In her last year in office spending reached £358.6bn (in 2007-8 prices). In other words real spending, spending after allowing for inflation, had risen by 14% during the Thatcher years.

John Major was also attacked for Tory cuts, though less personally than Mrs Thatcher. By the time he left government  in 1997, spending had risen to £410.8bn (2007-8 prices), a further real increase of 14.6% over his period in office. Conservatives always increased real spending on the NHS, appreciating the popularity of the free at the point of use principle behind this service.

Labour continued with real increases in spending during their time in office, boosting the rate of increase considerably  in the later years after a more prudent start.  The Coalition has increased total managed spending from £669.7bn in the last Labour year to £732 bn in 2014-15, a small real increase and a 9.4%  cash increase. The Coalition, like its Conservative and Labour predecessors, always increased the NHS in real terms.

The issue we should be debating is not the quantity of money overall, but what we get for the money we do spend. Instead of having endless debates about how much real increase there has been, and who might offer the larger increase, we need debates about who can get best value for the money we spend. The debates should be more  about what public service  we want, not how much do we want to spend. When you go out to buy things for yourself you do not insist on spending up to budget, or insist on a real terms increase in your spending. You try to buy what you want for the lowest price, and are pleased if you get something better for less.

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90 Comments

  1. Mark B
    Posted April 1, 2015 at 5:38 am | Permalink

    Good morning.

    The issue we should be debating is not the quantity of money overall, but what we get for the money we do spend.

    Exactly !

    And the best way to make sure that the money is spent wisely, is for those whose money it is to decide for themselves where it goes. The State is a very inefficient means of doing this. But it does provide large union backed jobs, which in turn provides fees both to the unions and to the Labour Party.

    • Lifelogic
      Posted April 1, 2015 at 10:00 am | Permalink

      It also provides votes for the labour party from its client state of benefit claimants, state sector workers, the envious chip on the shoulder types and the likes and pays for lots & lots of “every bigger state” government propaganda and for the BBC.

    • Timaction
      Posted April 1, 2015 at 2:22 pm | Permalink

      ………….The issue we should be debating is not the quantity of money overall, but what we get for the money we do spend……

      The Tory led Government in agreement with the Labour Party gives away £26.5 billion and rising in EU net annual contributions and foreign aid. At a time of making significant cuts to our military and police budgets.

      UKIP is committed to 2% of our GDP on our defence and an increase of £3 billion on our NHS. Further billions would be saved as foreign people would be expected to pay for their own health services and/or have travel insurance as we do when we travel abroad. More common sense from the ONLY patriotic party.

  2. Lifelogic
    Posted April 1, 2015 at 5:56 am | Permalink

    Indeed Major and Thatcher both abjectly failed to control the malignancy of excess public expenditure and endless waste.

    As you say the issue we should be debating is not the quantity of money overall, but what we get for the money we do spend/waste.

    What value do we get? So much of what government does (such as all the expensive energy green crap, the daft employment laws and the over regulation of almost everything) deliver a huge net negative to the population? Price is what you pay value is what you get. We perhaps at best get 20% of value from the government – when you take full account of these complete negatives that are delivered alongside the few positives the rather poor defence, legal system, schools, roads, rubbish collection and hospitals.

    • Lifelogic
      Posted April 1, 2015 at 10:02 am | Permalink

      Take the negative of the damaging and pointless wars (one entered into on a blatant lie) for example – a very clear huge negative value from those.

    • Lifelogic
      Posted April 1, 2015 at 11:29 am | Permalink

      I just heard Miliband this morning. He was asked about the inevitable loss of jobs should he outlaw zero hour contracts. He replied with something like:- I don’t think that will happen.

      There speaks someone who clearly knows nothing at all about running a business or indeed economics. Just as I suppose one might expect from an Oxford PPE man.

  3. alan jutson
    Posted April 1, 2015 at 6:08 am | Permalink

    The simple reason why they say it John, is because it works, people believe them, true or not, and your Party and PR people have absolutely failed to get your message across.

    Cameron and Osbourne went big time publicity wise on cuts, cuts, cuts, cuts they said as a way to straighten the books, and people believed that is what has happened, because unlike you on this site, no one has told them any different.

    Thus the more people you have on benefits, the more they are under State control the more fear Labour can put in them.

    The deliberate State Social engineering Policy of Mr Brown of working tax credits and other Benefits is securing larger and larger numbers of people to the Labour cause, and in my opinion, that is why the Labour vote is holding up.
    There can really be no other reason, because clearly they are absolutely incapable of running anything to a budget.

    The Eurosceptics will have exactly the same problem when and if we ever get a vote on the EU, and foreign nationals are allowed to vote in a referendum,.
    They will vote to continue. membership so that more of their families can come here.

    The fact of the matter is few now vote for the good of the Country, most people vote for what they think is best for themselves, and who can blame them when they have seen so many of our Politicians, (Uk and EU) past and present, with their noses in the trough, no matter what their Party.

    Afraid times have changed, and the Conservatives have yet to really wake up.

    Your only saviour may yet be the fact that almost every other Party is going big time on refusing to work with any Conservative Government, the old English spirit of how dare they, may get you a few sympathy votes.

    • fedupsouthener
      Posted April 1, 2015 at 8:59 am | Permalink

      This is the problem we are facing. Any government that talks about cuts to welfare is on a good hiding to nothing. Thanks to over generous payments to feckless families having more children to gain extra income and tax credits given out like smarties making it more lucrative to sit at home reproducing, we now have a situation where anything mentioned about reductions in welfare makes people want to vote for whoever is promising them more freebies.

      What makes people think that claiming benefits should be more lucrative than going out to work and how come we have got ourselves into this situation?

      Something needs to change and fast. Other countries in Europe do not allow their citizens to sit around and claim benefits for life.

    • Denis Cooper
      Posted April 1, 2015 at 12:51 pm | Permalink

      I don’t feel that much has changed since before the last election when the highly intelligent and well-educated Victoria Coren appeared on Question Time and whined that she didn’t even know what was meant by “budget deficit”, was it some kind of bank account, or what? I guess that now quite a few people have been misled by false statements from the Tories about how they have been paying down the debt, and if it assumed that whatever the problem was it has now gone away the Tories could end up being hoist by their own petard.

      • alan jutson
        Posted April 1, 2015 at 4:14 pm | Permalink

        Dennis

        Agreed, most people I speak to do not understand the difference between deficit and debt either.

        Most are simply turned off by the complex way politicians try to explain anything (JR being the exception) probably because they are not confident either that they actually know themselves !

        Certainly few people now seem to understand, or are interested in budgeting, which is probably why we have such high levels of personal debt in this Country.

        I said before the last election that a very simple set of diagrammatical drawings/slides would be the best way to put the point across in the most simple manner, but no seems to understand that a picture tells a thousand words.

        All these very expensive PR and Advertising agencies are failing because they are getting too clever, and too complicated.

        After the Election and when the Conservatives got into power I said they should have a State of the Nation broadcast within the first 3 months to clearly explain to the population the huge financial mess Labour left us in.

        Never happened, so a huge opportunity lost to put a marker down from where they could be judged.

        The only hope now, is to produce the actual note that Labour left as a reminder !

        So many opportunities lost, a good and competent salesman would have buried Labour a long time ago with simple understandable facts.

        • Denis Cooper
          Posted April 2, 2015 at 7:38 am | Permalink

          Indeed, the Tories should have buried Labour at the last general election, but Osborne let them off the hook and we got a coalition, and then the LibDems blocked the boundary changes so now we may well be heading for another coalition … the Tories’ plea is that they made an extraordinarily large number of gains in 2010, but what I look at is the ridiculous number of people who will still prepared to vote for Labour despite the appalling mess that they created, 30% of those who voted.

  4. Mike Stallard
    Posted April 1, 2015 at 6:30 am | Permalink

    What is the State actually for?
    The impression I get – certainly from the vox pops on About Anglia is that the State is a huge money making machine which hands out goodies to ME, not so much YOU. Me is either “the vulnerable” or “an OAP” or a “hard working nurse” or “My kiddie and me”. Never have I seen anyone begging money for anyone else – except of course, people begging for their own charidee. Eatanswill, of course, is nothing new: present day elections seem to be very similar, just wearing different clothes.
    Political Theory says that the State is there to defend the people both internally and externally. Are we actually doing this though? Uncontrolled immigration? Little or no defence and poking the Russian Bear? Handing our parliament and foreign policy and our legal system to unelected foreigners without a murmur?
    We happen to have an excellent (Conservative) MP who will get my vote. Otherwise, I really do not think I would bother.

  5. JoeSoap
    Posted April 1, 2015 at 6:41 am | Permalink

    You are topsy-turvy on this.
    The first debate should be about how little we need to tax and spend to keep a safety net and limited communal activities, not how much we spend. Maybe defence, rubbish collection, kids’ playgrounds, things like that are of benefit to groups of people and are silly to pay for individually. The state spend could be cut in half or more with most of the indigenous population outside the public sector hardly noticing. Those people could then be deployed to productive jobs, where they could raise a little more money in tax for the state to put aside into investments for spending on other things later.

  6. Andyvan
    Posted April 1, 2015 at 6:44 am | Permalink

    No, what we need a debate on is how we deal with a system that has allowed politicians to build up a massive public debt which is still increasing purely to buy votes and pay off their friends and special interest groups.
    This is obvious when an election becomes a bidding war about which party can steal the most in taxation and debt then give some of it back in tax breaks and benefits. How is it that voters can be so easily bought? I can only assume that it is because they know so little about economics, a quality shared by most politicians and a lot of so called economists.

    • Hefner
      Posted April 1, 2015 at 9:31 am | Permalink

      Ok, most voters don’t know about economics, neither most politicians nor a lot of economists. So who should I trust? This morning, there were conflicting reports about the state of the country by a group of business people and a group of academic economists? Who should I trust? Who in business, the CEO, and CFO of big corporations or the owners of SMEs? Who in academia? The neo liberals, the neokeynesians? The business economists, the development economists? the IFS or the OBR, the MPC or you?

      • libertarian
        Posted April 1, 2015 at 5:48 pm | Permalink

        Hefner

        Why do you need anyone to tell you what to think?

        Why not analyse the situation yourself? Why not do your own research. How about apply some common sense to what’s going on.

        What you’ve highlighted is also actually where the solution is.

        All the people you mention have a different view because they are all self interested. Therefore there are 2 ways to look at this. Whats best for you and whats best for the majority. No one speaking from self interest can be trusted to give an unbiased account

        • Hefner
          Posted April 1, 2015 at 8:51 pm | Permalink

          Libertarian, thanks a lot for that. You are, willingly or not, just making my underlying my point: on this website, there are a majority of self-interested people. Everything you tell me to do (which I completely agree with) should also be done by everybody else here. How is this possible that whatever the topics, we have all the usual names drooling their usual comments? If one takes only their arguments from, say the Telegraph or the Guardian, how can one be so sure that one gets a balanced opinion?
          Or isn’t there a risk of only having the convinced talking to other convinced, based on the same shared values?
          Isn’t democracy based on discussions between different points of view, or is it that, despite the Mother of Parliament or the Magna Carta usual buzz, we are already here on this forum on a “post-democracy” path?

          • libertarian
            Posted April 2, 2015 at 8:17 pm | Permalink

            Hefner

            I agree, this forum and its contributors ( myself included ) give our opinions from a selfish point of view. Thats why this kind of debate never actually solves things. Its why in business for instance lone inventors and innovators always out perform corporates made up of committees.

            My point really is that neither the Guardian or the Telegraph have balanced views so reading both/all will be of no benefit in understanding issues and coming up with real solutions

  7. Narrow Shoulders
    Posted April 1, 2015 at 7:06 am | Permalink

    Quite

    How wide a net should national and local government spread? What areas should be the responsibility of the taxpayer and what areas covered by the individual?

    I have not seen any plans for smaller government with fewer ministries put forward by your party Mr Redwood. Your party also oversaw the largest rise in contributions (real and cash) to the EU in this last parliament.

    I end with a mention of international aid while cutting (actual cuts not rhetoric) defence of the realm.

  8. Richard1
    Posted April 1, 2015 at 7:17 am | Permalink

    Indeed and the situation is not helped by interviewers eg at the BBC constantly asking politicians to commit to a certain expenditure (the NHS again being the favourite) instead of challenging them in outcomes. How come for example that other countries with semi or wholly private health systems don’t have disasters such as Labours mid-staffs tragedy? Why is there NHS in Scotland and Wales – despite high spending – so bad in terms of comparative outcomes?

    We should note that public spending and tax as a %age of GDP are far lower in countries such as Switzerland and Singapore, but public services, especially health, are far better.

    • Lifelogic
      Posted April 1, 2015 at 10:08 am | Permalink

      Indeed without the endless lefty crap from the BBC we would not have a lefty/greencrap/pro EU/tax borrow and waste Tory party we would have a proper one. They only exist due to endless “BBC think” lefty indoctrination on food banks, zero hours contracts, exploited tenants, the “living wage” and the marvellous “envy of the World” NHS!

  9. Alan Wheatley
    Posted April 1, 2015 at 7:18 am | Permalink

    My experience of the NHS over several decades and in several places has been mixed; from good to bad. The anecdotal evidence the media regularly highlight also ranges from good to bad, and in a few cases to the extremes at both ends of the spectrum. This is hardly surprising for such a large organisation, especially one where much judgement is emotional.

    All organisation can and should improve. It seems to me a more balanced assessment is needed. Plans to improve the bad by making changes should not be condemned as an attack on the NHS. Praise of excellence should not be lauded as proof that all is well.

    I would also add that plans to improve the efficiency of delivery, such as by concentrating services and closing down smaller units, must include an evaluation of the impact on the ability of patients to access those services. The NHS is, after all, a service provider with mostly captive customers who do not have the option of an alternative provider. A supermarket that closes a local convenience store branch can not force its customers to then make a difficult journey to their super-store, and nor should the NHS.

    • Denis Cooper
      Posted April 1, 2015 at 12:31 pm | Permalink

      It’s called “externalisation of costs”.

  10. Ian wragg
    Posted April 1, 2015 at 7:19 am | Permalink

    So when are we going to have some spending cuts and not to defence. What about foreign aid, EU contribution, reducing quangos or abolishing the fools at Decc.
    Plenty of low hanging fruit but that’s too easy.

    • turbo terrier
      Posted April 1, 2015 at 4:47 pm | Permalink

      Very well said Ian.

      I am surprised you only highlighted 4 areas. Every department should be run on a business basis in that if it can’t fund itself it goes.

  11. Denis Cooper
    Posted April 1, 2015 at 7:45 am | Permalink

    For amusement I’ve just taken a silly test on the Telegraph website, and I find that while I’m 70% in agreement with UKIP I’m 49% in agreement with Labour but only 35% in agreement with the LibDems. Somewhat leftish views, then, which is what I’ve found previously in another test … to be fair, I did exclude both the Tories and the Greens as parties that I would never vote for.

    • Know-Dice
      Posted April 1, 2015 at 10:20 am | Permalink

      It is April 1st today 🙂

      Apparently I’m:

      69% UKIP
      56% Conservative
      40% Labour !!!

      • agricola
        Posted April 1, 2015 at 11:28 am | Permalink

        At 165% there must be one hell of a lot of you to go around.

  12. Denis Cooper
    Posted April 1, 2015 at 7:53 am | Permalink

    Surely the first question is whether the rate at which public spending increases is above or below the rate at which GDP increases, with the former being adjusted for inflation as above to make it comparable to GDP which is automatically adjusted for inflation. If public spending keeps growing faster than the economy year after year then that will almost certainly be storing up trouble for the future.

  13. agricola
    Posted April 1, 2015 at 7:55 am | Permalink

    Thank you for slaying the Labour dragon and pointing out that getting bang for your buck is of prime importance. This is why I have argued that while retaining the NHS as a free at the time of need service, it makes sense to get that service as competitively as possible. I do not mean as cheaply as possible because competitiveness should contain the element of quality as well as price.

    I asked myself why public spending has continued to increase, to which the answer is relatively simple. Our population has increased from around 56 Million in 1975 to about 64.5Million today. About the size of an additional London in 40 years. The real acceleration began in 1997 from about 58 Million through to the current 64.5 Million.

    Part of the increase could be put down to the success of the NHS. people living longer and reduced childbirth deaths. However the acceleration from 2004 at 59Million to present day 64.5 Million is down to Labours open door policy to gain more grateful votes, and the influx of economic migrants from a failing EU ,and from in particular , the EU giving membership to failed communist satellite states.

    I look upon the conservative desire to stem it by tightening up the benefits system as fallacious. It is questionable whether the EU would allow it and I suspect most of the EU economic migrants come to the UK to work. No bad thing as a sizeable number in our own population prefers government provision to work.

    If you wish to get public spending down I would submit that you have to work at getting the population down. I suspect that the rate of increase among the incoming population is measurably higher than among the indigenous population. Possibly cultural reasons account for this. Consider limiting child allowance to one or at most two children. The only way to control the influx from the EU is to leave it via Article 50. Thereafter the system needs to be very selective from wherever they desire to come. getting back to 1959 levels would undoubtedly lift an enormous burden from our public services.

    The figures I give only include the influx we know about. There is undoubtedly a very large number who are in the UK illegally, so their removal would also ease the pressure on public services. Food for thought and a little honesty among politicians.

    • backofanenvelope
      Posted April 1, 2015 at 11:03 am | Permalink

      One of the big supermarkets claims that our current population is about 70 million!

      Why do we allow non-EU migrants access to tax payer funded benefits and services? Beats me.

  14. JimS
    Posted April 1, 2015 at 8:10 am | Permalink

    Add to this the complaint that companies and the rich aren’t paying ‘enough’ tax, as if government should always need and spend more.

    The politicians that push that line never seem to draw the obvious conclusion that higher taxes will lead to higher prices to the taxpayer, plus 20% VAT!

    There might be an argument that the rich avoid paying taxes, (make taxes simpler then), but what with fixed tax allowances, percentage based-taxation and ‘progressive’ step increases to those rates, it is difficult justify the idea that they should pay more.

  15. Brian Tomkinson
    Posted April 1, 2015 at 8:14 am | Permalink

    Once again your own party is part of the problem you identify, not the solution. The three legacy parties, with support from most of their cheer leaders in the MSM, are forever telling us how they know best how to spend our money and more of it. In fact they are still borrowing £2bn per week to feed their lust to spend. ‘Public services ‘ have always insisted on spending (and wasting) up to their budgets and regarded anything short of a real terms increase as a major assault on their very existence. The difference in attitude when it is ‘public’ money they are spending rather than their own is clear except to themselves.

    • Denis Cooper
      Posted April 1, 2015 at 12:14 pm | Permalink

      There’s a moderately amusing video of Milton Freeman explaining “The Four Different Ways To Spend Money”, here:

      http://www.financialsamurai.com/the-four-different-ways-to-spend-money-by-milton-friedman/

      By his reckoning the greatest stringency is when you are spending your own money on yourself, and the greatest laxity is when you are spending somebody else’s money on somebody else.

      • Lifelogic
        Posted April 3, 2015 at 7:05 pm | Permalink

        Indeed and he is quite right as usual.

    • turbo terrier
      Posted April 1, 2015 at 4:54 pm | Permalink

      Too true BT.

      The silly season is really flat out as the councils rush around like headless chickens trying to spend their allocations for the year. Repairs to roads seem to be leading the pack. Funny they only get done in the last couple of weeks to the end of the financial year. What are they doing for the other 11 months?
      3/5ths of naff all!!

  16. Leslie Singleton
    Posted April 1, 2015 at 8:15 am | Permalink

    But I thought that Economics doesn’t like analogy with personal and family spending–do we not have to keep the dreaded Aggregate Demand up come what may? Can’t say I am much of a believer (to say the least) but I do deprecate the use of the analogy only when it suits.

  17. Hefner
    Posted April 1, 2015 at 8:15 am | Permalink

    “You try to buy what you want for the lowest price, and pleased if you get something better for less” . Yes, I cannot agree more.
    But did we get a better NHS with the coalition than with the previous government? Did we get better state schools? Did we get better security services? Did we get a better foreign policy? And at the local level, did we get better roads, better lighting, better garbage collection, better information on how, why and under whose pressure decisions were taken? And at household level, did we get better priced utilities? Did I and my family feel better off than five years ago?
    A lot of questions, and not many I can answer with a resounding “yes”.

    • libertarian
      Posted April 1, 2015 at 5:52 pm | Permalink

      Hefner

      no wonder you are easily lead, you asked the wrong questions. You should ask

      Do we have better health outcomes, do we have a better educated workforce, are our interests protected etc.

  18. Martyn G
    Posted April 1, 2015 at 8:15 am | Permalink

    I much agree with your closing para, John. There is another issue that has long infuriated me, which is the mad way that, as the end of each FY approaches, councils high and low and the state as a whole spend, spend, spend to the limit of their budget almost regardless of need.
    I gather that this is because if ‘they’ can be seen to have not spent to the limit it might be thought that they did not need as much money in the next FY. Madness and I wonder just how much money in total is wasted in this way?

    • alan jutson
      Posted April 1, 2015 at 9:21 am | Permalink

      Martyn

      Yes the lorries and workmen were out in Wokingham today, laying a red compound spray on the roads to inform us that there is a bend ahead !

      We get these toy town coloured compounds sprayed all over the place every year, green, red, and beige, because they lift and come off after a couple of years.

      Joke is at night, when its raining, the road still looks black in the car headlights no matter what colour spray they have used.
      So when the risk is at its highest, it has absolutely no effect.

      Just to enlighten you all.

      I think the colours mean

      Red, possible danger ahead, bend in the road.

      Green, cycle lane.

      Beige, approaching traffic signals/junction.

      Blue, disabled car parking space.

      Meanwhile huge potholes remain in so many of our roads that they could have a cyclist/motor cyclist off their bike and killed.

      Difficult to make it up really !

      • alan jutson
        Posted April 1, 2015 at 9:22 am | Permalink

        This is absolutely true, and not an April fools joke !

        Just in case a few wonder.

    • graham1946
      Posted April 1, 2015 at 10:23 am | Permalink

      Martyn,

      This is not confined to the public sector, large firms also employ the same strategy. I’ve worked for a few over many decades and it is the misunderstanding of what a budget actually is for and the constant looking at figures only, rather than value which cause it. I have run departments which have undershot budgets and had the following year cut, regardless of need or being sensible. Slavish devotion to figures without reason are the bane of any manager’s life and politicians who mainly have no managerial experience are addicted to it. They know the price of everything and the value of nothing.

  19. lifelogic
    Posted April 1, 2015 at 8:19 am | Permalink

    As you say the public try to buy what they want for the lowest price, and are pleased if you get something better for less.

    With governments this is not so. They are buying something for someone else and with someone else’s money. They care not what the spend nor what value (if any) they get. They are just as happy blocking the roads with pointless traffic light, speed humps and islands as they are ripping them out again later. Or littering the country and seas with pointless wind farms as they will be removing them in a few years time, or mugging motorists in bus lanes and on box junctions. To them it is all just a way to make a living and get a good pension.

    • lifelogic
      Posted April 1, 2015 at 8:22 am | Permalink

      The only protection against the waste are MPs but this is clearly almost totally useless as a mechanism as they too a mainly interest in their personal careers and pensions.

      • Brian Tomkinson
        Posted April 1, 2015 at 8:47 am | Permalink

        A depressingly accurate scenario.

  20. boffin
    Posted April 1, 2015 at 8:28 am | Permalink

    Well said, Sir!

    The sad truth is that featherbrained politicians – at all levels! – find it so easy to promise to throw other people’s money at any problem, rather than solving it, which might be a bit too hard for them.

    The NHS, for instance, remains a paragon of bureaucratic waste (I’ll leave it to others to offer specific examples of this, since my prior attempt to post one was not accepted).

    • agricola
      Posted April 1, 2015 at 11:38 am | Permalink

      I will give you just one example. I have an excellent pair of stainless steel nail clippers, value about £20.00. They came to me via a friend of a NHS chiropodist who assured the recipient that after one use they have to be thrown away. I can understand possible cross infection issues, but what happened to autoclaves. Such wonton waste I find unbelievable. and wonder what the full extent of it is across the NHS.

  21. English Pensioner
    Posted April 1, 2015 at 9:25 am | Permalink

    On of the things I learnt in the years that I worked in the Civil Service was that the definition of words by the Service and politicians is totally different than in the real world.
    Basically the definition of a “cut” is when a department does not get the budget increase that it has demanded. A “very severe cut” is when there is no increase whatsoever whilst “unsustainable cuts” are when the budget is actually cut.
    There is also a tendency to believe that if you can save money somewhere, you are free to go and spend it elsewhere. So if, for example, more people are in work and thus less benefits need to be paid, the money should somehow be spent by the department for fear of a smaller budget in the following year.
    Similar definitions also apply to any proposed staff cuts.
    The whole Civil Service is built up in such a way as to make it very difficult to cut money or staff.

    • Denis Cooper
      Posted April 1, 2015 at 11:59 am | Permalink

      After the 1997 election one refrain from Labour MPs took the form “The money’s there … “, followed by a proposal for spending it on this or that. But thirteen years on, and the humorous (?) note left behind by the outgoing Treasury secretary for his successor said “I’m afraid to tell you there’s no money left.”

      • petermartin2001
        Posted April 3, 2015 at 10:06 pm | Permalink

        “I’m afraid to tell you there’s no money left.”

        I think that must have been a joke.Unless, all the government’s computers had malfunctioned at the time and no matter how hard Labour politicians and civil servants were banging on those keypads they could not edit bank accounts upwards as they were used to doing.

        The Conservatives must have soon got them going again though. They’d have called in top level private sector specialists to get the job done properly! All governments need those deficits! 🙂

  22. Atlas
    Posted April 1, 2015 at 10:02 am | Permalink

    This is off topic:

    John, when your leader has his next Leaders TV outing perhaps you could get him to

    a) wait until the end and,

    b) shake the hand of the small audience present.

    Cameron’s lack of so doing contrasted badly with Miliband who did. These matters of common courtesy matter – especially as all Cameron did was to reinforce his image of being out of touch and not caring about the ordinary man.

    BTW, I agree with your overall sentiments in this post.

  23. Tony Houghton
    Posted April 1, 2015 at 10:24 am | Permalink

    But surely John there have been sone real cuts in spending within individual Ministries even though the yearly total of Government spend has been increasing!?

    Reply, Yes, there were some cuts in individual departments in specific years, but overall there has been continuous real expansion in public spending all the time I have been involved in politics.

  24. graham1946
    Posted April 1, 2015 at 10:40 am | Permalink

    Your last paragraph is obviously the important bit – value for money.

    It is therefore all the more absurd that your government has earmarked 0.7 percent of GDP for Overseas Aid and is the exact opposite of what you espouse. Why does no-one in the top positions listen to reason but just plunge ahead with dogma? Presumably if it was their own money they wouldn’t do it and therein, I think, lies the answer – ‘its only public money, lots more where that came from, we don’t have to account for it or be held responsible for what ends up down the drain’.

    Regarding the 70’s and 80’s, I think you fall into your own trap of just counting the money. As far as I recall there were real cuts which hurt some people, rather like since 2010 but the budget went up, (just as is still happening) and I would suggest, this was due to to increased welfare after the destruction of the mines and steel making for instance. We had enormous wealth from oil production during the latter years of the 20th century, but we got b.all for it – just peed it up the wall of welfare. No-one can point to something substantial that was of lasting use built on it I suggest. Before the pedants jump on my case, this is my opinion, I have no figures and being retired have more important things to do than go looking, but I do have nearly 70 years of life experience, living through many governments, who always ultimately fail at what they try to do.

    • Denis Cooper
      Posted April 1, 2015 at 11:49 am | Permalink

      To some approximation the oil revenues were spent on holding the UK together at a time when Scotland was being hit by a perfect storm of adverse factors and could have been snapped off. If that does happen in the future then at least some of the English might realise that this was actually a very good use for the money in principle, even if it was not always spent as well as it might have been. I get the impression that a large part of the population of Scotland is now in the grip of a collective delusion, a kind of mania, and it may be that the oil money only bought the UK another fifty years or so and did not secure its permanent survival; then after more than three centuries those of us south of the border will find out what it is like to share an island with a less than friendly foreign power dominated by a distinctly anglophobic and potentially authoritarian party.

      • graham1946
        Posted April 1, 2015 at 2:00 pm | Permalink

        So oil money stopped Scotland being snapped off. I certainly didn’t realise that there was such an engineering project – saw nothing of it in the news. Not worth the money I reckon, just to featherbed them for evermore to the tune of £1600 extra per capita. I’d rather have had a Wealth Fund like Norway, thanks. They are incredibly ungrateful blighters. Anyone visiting that country will be aware of their feelings towards the English, much like North Wales.

        • Denis Cooper
          Posted April 1, 2015 at 3:48 pm | Permalink

          You could have had a Wealth Fund, but not built up from the oil revenues which would have departed with Scotland, which would have been almost of all of them.

          • graham1946
            Posted April 1, 2015 at 6:59 pm | Permalink

            Only if we let them. Scotland does not have rights to all the oil. Oil has been uder the sea for millenia and if it was up to the Scots would still be there. It took American, British and Dutch technology to get it up

          • Denis Cooper
            Posted April 2, 2015 at 7:44 am | Permalink

            There is no reasonable way that the Anglo-Scottish maritime border could be drawn to give the continuing UK anything more than a small share of the oil.

  25. Vanessa
    Posted April 1, 2015 at 11:02 am | Permalink

    That is nothing to be proud of. It just confirms that every government (“on the centre ground”) nowadays is left wing and “labour”.

    We need a true Conservative government which believes in low taxes and smaller State i.e. LESS spending. Nobody will do that. Spoil your ballot paper! If enough of us do that (i.e more than who vote) it will make them sit up and THINK.

  26. Hefner
    Posted April 1, 2015 at 11:08 am | Permalink

    I cannot make much sense of that discussion: with an increasing population, and for example the replacement of old technologies by new ones within the public sector in the NHS in particular, isn’t reasonable that public spending increased from 1978 to 1997 to 2010 to 2015, even in constant prices?

    The only way to address properly such a debate would be to have constant population, constant level of technology, constant external prices for imports, constant etc., otherwise isn’t it impossible to have an adequate metrics for measuring “spending”?

  27. Nick
    Posted April 1, 2015 at 11:09 am | Permalink

    Value for Money.

    Mr Median wage has 4,800 a year of NI contributions.

    Over his working life he pays in 225,000 pounds of value into the state

    Then his average life expectancy at 65 is 18 years. He gets 5,800 of value each year. 104,400 back.

    That’s crap value. He doesn’t even get back the value he paid in.

    If it had gone into the FTSE, he would have had 840K in a fund.

    That’s really really crap value. Dire.

  28. rick hamilton
    Posted April 1, 2015 at 11:09 am | Permalink

    As a businessman I see no reason why my hard earned money should be filtered through thousands of bureaucrats before it is applied to something useful. In that spirit I will vote for any party which promises smaller government, lower taxes and less intrusion into peoples’ lives. The only problem is that I cannot find one.

  29. majorfrustration
    Posted April 1, 2015 at 11:29 am | Permalink

    Perhaps if we saw politicians not ripping us off with their expenses – yes still- and dealing with their pension as we have to then we might take them seriously. Feed the plebs a few promises which we have no intention of meeting etc etc – first excuse “we are ready to make difficult decisions” translated means – you will take the hit but we are fine followed by “its our coalition partners that are stopping us” bla bla
    And if the ineptness of our Politian’s is not enough in another ten years the UK will be twinned with ISIS

    • Vanessa
      Posted April 2, 2015 at 8:09 am | Permalink

      Majorfrustration: And when they are found out they have gall to say they have done nothing wrong and will stay in the job to “sort it out” ! When did anyone take responsibility ?

      The whole point of being top of the pile in government, business, etc. is that you are paid a lot of money TO TAKE RESPONSIBILITY. So YOU are kicked out if your team is found to have cooked the books, YOU should have known what was going on and if you did not YOU are to blame. That is what happens in the real world.

  30. waramess
    Posted April 1, 2015 at 11:36 am | Permalink

    Fine, so the Conservatives actually spend more than the Socialists do.

    Not only is this an incredible “boast” by a Conservative but it just shows how close the two main parties are. Both are unashamedly Keynesian and both believe in big government. What a choice.

    All government spending is done as a monopoly supplier and, as such it is a nonsense to believe we get value for money. When did anybody hear of any monopoly supplier giving value for money?

    So, we must take heart from the assertion that Conservative spending is less wasteful of the nations resources than the Socialists.

    This presumably excludes such things as HS2, overseas aid, windmills and the like, net EU payments and so on and so forth where both parties intend to spend equal bucketloads of taxpayers cash.

    I can’t really think of a better reason not to vote for either of them

  31. Margaret Brandreth-J
    Posted April 1, 2015 at 11:53 am | Permalink

    The conservatives are known as the party who pander to business , yet throughout the last labour term the rapid intervention of businesses in our steadily prospering nation brought us to our knees. This is the dilemma I face when voting.

  32. ChrisS
    Posted April 1, 2015 at 11:54 am | Permalink

    Thanks to the Lib Dems misguided policy of raising the basic personal allowance, we now have a very large proportion of the electorate who no longer pay any Income tax whatsoever.

    There are about 49m adults of voting age but only 29m income taxpayers. The latter figure is down from 32.5m income tax payers in 2007-8 despite a large increase in the working population

    The Conservatives have foolishly embraced this LibDem policy and tried to make it their own. It’s a policy akin to shooting yourself in the foot.

    In reality it means that around 40% of those currently eligible to vote in the General Election have a no vested interest in supporting a party determined to reduce public spending. In fact, they are very likely to be enthusiastic supporters or an unholy alliance of profligate spenders like Labour/Green/SNP/Plaid Cymru and the LibDem.

    It would have been far better to re-introduce the 10% tax rate so that many more people remain liable to pay income tax, no matter how small the amount.

    Under the current policy, it’s going to be almost impossible to get a majority in favour of reducing public expenditure and it won’t be long before we have a majority of adults who can vote but don’t pay income tax.

    That’s not a good long term view for wealth creators or the Conservative Party, is it ?

    • graham1946
      Posted April 1, 2015 at 5:58 pm | Permalink

      Raising personal allowances is not the problem, low wages are and we are fast becoming a low wage economy.
      Taxing people below minimum wage (income tax that is, for they still pay NIC’s which is the same thing) just creates in-work poverty which the genius Brown covered by tax credits. What is more incredible is that people above median wage £25,000 are getting benefits at all and it goes right up to the the level of about £50,000. No-on on that kind of money needs state help.

      • Chris S
        Posted April 1, 2015 at 8:35 pm | Permalink

        Brown’s in-work benefits have been a big contributory factor in creating the low wage economy. They allow employers to pay ridiculously low wages knowing that the taxpayer will top them up.

        I was not suggesting for a minute that the policy of raising the threshold for paying income tax has created an economic problem, just that from a long term perspective it’s an own goal for the Conservative party !

  33. petermartin2001
    Posted April 1, 2015 at 1:18 pm | Permalink

    There’s something being overlooked in this discussion!

    The same number of musicians is needed to play in an orchestra today as was needed in the 19th century. The productivity of musicians has not increased. On the other hand, real wages of musicians, as well as in all other professions, have greatly increased since the 19th century. Therefore it is much more expensive to perform a Mozart Symphony now than it was then – even allowing for inflation in the meantime.

    In a range of businesses, such as the manufacturing sector, workers are continually becoming more productive due to technological innovations to their tools and equipment. Humans are always adept at working out ways to perform tasks more efficiently. In contrast, in labour-intensive sectors that rely heavily on human activities, such as nursing, education, or the performing arts there is little or even negative growth in productivity over time. As with the orchestra example, it takes nurses the same amount of time to change a bandage, or teachers the same amount of time to mark an essay now as it did then.

    Furthermore whereas we wouldn’t expect such workers to work quite so many hours now as we did over a century ago. Children left school at maybe 13 then. Add another ten years for now!

    Therefore we have to expect that costs of running many essential government supplied services, such as the health and education services, will increase more in line with, or even faster than, general earnings which in turn will be be in line with GDP levels. In other words, paradoxically, as GDP has increased, taxpayers are getting less for their £ spent – even after adjusting for inflation.

    • graham1946
      Posted April 1, 2015 at 6:07 pm | Permalink

      We do, and I’d rather listen to a philharmonic orchestra than to a bloke with ipod. Musicians as a group are still actually, poorly paid (the proper ones that is, who read black dots and things, not the modern pop variety). I’d also rather not have a doctor with a saw take my leg off before modern anaesthesia. Its called progress. We can’t have everything on the cheap.

    • forthurst
      Posted April 1, 2015 at 9:44 pm | Permalink

      “The productivity of musicians has not increased.”

      The modern Symphony Orchestra is at least twice the size it was in Mozart’s day; furthermore, there has been a catastrophic reduction in the productivity of composers, such that Mozart, having started serious composition at five, was able to produce six hundred pieces during less than thirty years, most of which provide continuing employment for many thousands of musicians, whereas a typical modern composer will spend an entire career, manufacturing with the aid of advanced computer software, inchoate auditory torture in the fashion of Schoenberg or even Stockhausen, whilst producing a much smaller oeuvre, getting the odd piece commissioned (ie subsidised by BBC taxpayers, most of whom would rather listen to someone knowing all of three cords on a guitar or how to shout into mike) for one performance at a BBC Prom before being thankfully interred.

      • Denis Cooper
        Posted April 2, 2015 at 7:46 am | Permalink

        “inchoate auditory torture” – very good!

  34. PaulDirac
    Posted April 1, 2015 at 1:38 pm | Permalink

    I’m all for Hayek’s small state, one of the additional problem is that we are being stealth taxed to poverty.
    * Energy costs are hugely inflated by the green taxes for wind turbines.
    * We will be forced to pay for “smart meters” even if we refuse to have them installed.
    * HS2, that useless vanity white elephant, 70 billion and up.
    * Europe normal and extra and additional budgets.

    NHS is a problem, very few are prepared to stand up and demand efficiency, we will end up (as the NHS budget grows without limit) as a health service with an attached island (GB)

  35. REPay
    Posted April 1, 2015 at 2:36 pm | Permalink

    John you make a good point about the terms of the debate rather than focusing on absolute numbers. In any case, the figures used for the debate are meaningless to us…a billion pounds might be better expressed as x pounds for every member of the population or x pounds per income taxpayer.

    PS I am genuinely puzzled that having lost a million jobs in the public sector and got 2 million in the private sector, the deficit has not come down much faster.

    PS

    Reply Other budgets have gone up a lot, and welfare itself has risen thanks to the upratings of pensions and benefits. The pensions triple lock is expensive.

    • ian wragg
      Posted April 1, 2015 at 3:22 pm | Permalink

      Welfare has also gone up because many of the so called jobs are zero hours or self employed and filled by foreigners who receive in work benefits.
      You keep trumpeting the total number in work but never explain why tax receipts are below 2008 levels.

      • libertarian
        Posted April 2, 2015 at 8:42 pm | Permalink

        Ian Wragg

        You obviously aren’t interested in facts, preferring to make things up as you go along.

        A minuscule 2.3% of workforce are on zero hour contracts

        66% of those report that they DO NOT want a full time role

        17% are students unable to commit to full time

        The average hours worked is over 20 hour week

        The 4.6 million self employed people in the UK are almost entirely responsible for the job boom, because they are hiring people. Oh and just so you know the numbers of self employed have risen so dramatically because the business failure rate has plummeted and more of them are staying in business longer

        The official HMRC tax receipts for 2008 where £455 billion

        The official HMRC tax receipts for 2013 where £492 billion

        There are 3 areas of benefits available for those in work

        Housing benefit
        Council Tax benefit
        Child tax credits

        930,000 people get housing benefit
        790,000 people get council tax benefit
        the number of people getting child tax credits has FALLEN by 1.4 million since 2008

        Of the numbers above there is a massive overlap with large percentages receiving 2 0r 3 of those benefits in the same households.

    • petermartin2001
      Posted April 1, 2015 at 3:22 pm | Permalink

      You shouldn’t be too puzzled. The economy has money flowing though it. Its income is derived from Government spending and payments for exports. Its outgoings are taxes to government and payments for imports.

      Reducing government spending is therefore reducing its income. That reduces the ability of the economy to deliver taxes to the govt.

      To be fair to the government, the figures you mention on employment don’t look right. If they were we’d be like Greece. As the Greeks cut back their spending they are causing workers to become unemployed which means that they don’t pay tax any longer and instead have to be supported by welfare payments.

      Consequently they never really manage to produce those surpluses which they are required to by the Troika.

      • Edward2
        Posted April 2, 2015 at 7:38 am | Permalink

        By your logic if the Government spent 10 times its current level we would be better off.
        Poor old Keynes, his economic theories have been hijacked.
        How can 38% of the total economy which is State spending be the whole?
        And most income is created by individuals trading with one another within the nation.

        • Ted Monbiot
          Posted April 2, 2015 at 10:44 am | Permalink

          And where does the State get all of this money from in the first place?
          From us in taxes in the main, followed by the printing press and borrowing.

      • Denis Cooper
        Posted April 2, 2015 at 8:14 am | Permalink

        You seem to be arbitrarily excluding all publicly funded activities from your definition of “the economy”, when clearly they are integral parts of the economy only distinguished by the fact that most of the flow of money into them is via the government and not directly from private sources.

        • Edward2
          Posted April 2, 2015 at 10:48 am | Permalink

          Im not surprised productivity figures are down.
          From my experience in engineering when there is a large number of low paid employees applying for unskilled jobs the incentive to spend large sums on labour saving machinery is diminuished.

          • Edward2
            Posted April 2, 2015 at 10:49 am | Permalink

            Sorry posted in the wrong place.
            my apologies

      • petermartin2001
        Posted April 2, 2015 at 10:36 am | Permalink

        Edward2,

        … if the Government spent 10 times its current level we would be better off

        No. Like the temperature of Goldilock’s porridge, the level of Government spending/taxation has to be just right. Too little spending/ too much taxation and we get recession. Too much spending/too little taxation and we have inflation.

        The size of the State owned sector doesn’t define where money comes from. It can be 10% or it can be 90% but , just the same money has to be issued by government when it spends it into the economy. It then passes from person to person, company to company, and finances transactions in the economy. The higher the level of taxes the fewer transaction can occur as Government removes more money from the economy.

        • Edward2
          Posted April 2, 2015 at 5:59 pm | Permalink

          You assume only the State has money and the ability to create wealth..
          It gets its money in the main from taxation.
          I realise the economy is a circle, but your feeling that the State is the originator and most important driving feature in the economy is in my opinion wrong.
          This school of thought is one that has led us to a point where European nations citizens are driven to poverty by their overspending Governments.
          If you were correct EU nations would be booming.

    • graham1946
      Posted April 1, 2015 at 5:49 pm | Permalink

      JR has not replied quite as fully as he might so, maybe I can help a little if I may.

      1) Although we have many more people in work, productivity is lower. According to ONS figures out today, we are now producing less than in 2007, so quite where all these good, well paid good jobs are is yet to be explained.
      2) The triple lock on pensions is expensive of course, but not as expensive as it should be. We have the lowest pensions of the western advanced nations. Had all the money that people paid into the government pensions scheme been put into money purchase schemes rather than paid out to fund current pensions, it is estimated that even with today’s lower annuity rates, the retirement pension would be much higher than it currently is – I remember seeing figures some years ago, probably before the crash, saying the basic pension could have been in the region of £20,000 as against the current rate of £6000 or so. Pesky old people will insist on living longer, despite high numbers of this ‘rich’ section of society dying each year due to the cold

    • Brian Tomkinson
      Posted April 1, 2015 at 7:18 pm | Permalink

      Reply to reply,
      Ah I see, another one who picks out the pensioners.
      Why didn’t you reduce overseas aid instead of increasing it and then, to add insult to injury, you made it the only area of government expenditure to be enshrined in law.

  36. Jon
    Posted April 1, 2015 at 6:45 pm | Permalink

    Said this before so may get that message. This is a communication issue, if Parties are allowed to promote lies then the liers will prevail and multiply. Factually incorrect pronouncements should be followed by a public apology. An additional bit of regulation but one I think we would benefit from.

    The Chancellor brought in the OBR which I see as a good move. I think we could benefit from some sort of basic standard in claims politicians make. Well below the regulation many private sector professionals have to adhere too.

    In an election campaign there could be say 5 complaints allowed to the Electoral Commission, investigated in 48 hrs time limit and if found factually incorrect followed by a public apology. Could restore some credibility to the industry.

  37. a-tracy
    Posted April 2, 2015 at 1:49 pm | Permalink

    You can’t spend a % you can only spend real money. Spending a bigger % of less tax and thus having to borrow more to fund extravagant election gestures is what gets us into repeated Labour government overspending messes.

  • 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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