Will there be “cuts” when total public current spending is planned to increase by £92.5 billion over the next five years, rising every year during that period? Apparently so.
I guess there will be four sorts of cuts.
1. Sensible cuts because we do not need the public sector to do certain things. The end of ID cards, regional government and some quangos fall into that category for me.
2. Cuts in large planned increases in spending which the Labour government left in the plans but never had the money to carry through. Much defence procurement lies in this category. Labour kept reducing planned spending growth in defence, but left a long wish list of items they wanted to buy for a future date.
3. Cuts brought about by poor public sector management. Clearly there will be parts of the public sector that cannot manage within overall cash increases of 15% over five years. They are getting their retaliation in early, and claiming they will need to cut all sorts of things in order to live within the new tighter spending controls. It would be good if Ministers and Councillors would challenge this more, and show how it is possible to do a good job within the moderate cash increases available.
4. Cuts brought on in certain departments because other programmes are going to grow, taking up more of the increases in the totals than their proportion of spending. The EU budget, Overseas Aid, Health and debt interest programmes might all fall into this category.
So what can the government do to manage the process better?
1. The government should do more to explain that spending overall is rising, not falling. That makes public sector management easier, and should help morale. Too many people think the overall budget is being cut by 25% in cash terms, which is simply ludicrous.
2. The government should explain that Labour’s preferred medicine of more taxation is not feasible. Tax revenue is planned to go up by £176 billion a year in Year 5 compared with the last Labour year. That is a massive increase, which requires growth and good performamce from the private sector to deliver it. Taxing more would make it impossible.
3. Reduce the number of protected areas – especially by telling the EU that the EU budget and the UK contribution should go down, not up, in current circumstances. Sell more assets to reduce the amount of new debt taken out, thereby cutting the amount to be spent on interest on debt.
4. Find new ways to encourage and lift public sector managers so they can deliver good services for the modest extra sums on offer. Stop the language of gloom and cuts.