The cuts revisited


             On this site I last reported  public spending up 11% in cash terms in November 2010 compared with the same month a year earlier. I pointed out that the average increase was a more modest 7% from May 2010.  November was a particularly expensive month.

              It is good news that the figures from April 2010 to January 2011 are only 6% up on the same period the previous year, showing that the rate of increase is now on the way down. It would be better still  if other people in the public spending debate used the actual numbers so people can see the scale of the problem the government is trying to tackle. The worrying figure was debt interest. At £36.7 billion for  April 2010-January 2011, it was 47% higher than the same period in the previous year, showing the impact such high borrowing levels has and will have on public spending and  the public accounts. Debt interest now costs more than the Ministry of Defence.


  1. lifelogic
    March 10, 2011

    And yet we can still waste £billions on green energy, HS2, the equality nonsense, over regulation of everything, green house bling, employing 95 years and the rest.

    If a business is just say 10%, or even less, efficient than a competing one it can often go out of business or has to move just so it can compete. The UK state with its big government, huge over regulation and expensive green energy is doing this and worse to virtually the whole of UK industry.

    Expensive, non lending, banks does not help either.

    The result will be that they will go, do more abroad, scale down or just give up. they have no choice – what else does Cameron think they will do.

  2. alan jutson
    March 10, 2011

    Why can the governments expensive publicity machine and advisors not explain the position in such simple terms. All we get is Local Authorities, Public Service Unions, Labour and the media bleating about cuts, cuts, cuts.

    Do the front bench not understand they are losing the information war, by not giving out simple statements of comparison facts.

    Spending has gone up, all we are doing is reducing the rate of increase.

  3. norman
    March 10, 2011

    The goal must be to have economic growth outstrip the growth of the public sector over a prolonged period of time. As growth figures are inflation adjusted and these figures aren’t it’s not a straightforward comparison but I’m pretty sure the public sector is still growing faster than the economy, which is a scary thought given how large the starting position.

  4. Brian Tomkinson
    March 10, 2011

    The government has paid too little attention to publicising the gigantic cost of debt. Could this be because, despite all their talk of tackling the deficit, the cost of debt will increase year on year throughout the planned lifetime of this government?

    1. Geoff not Hoon
      March 10, 2011

      Mr. Tomkinson, You are 100% right the cost of our debt will continue to rise during this parliament. The good news we are told is the rise will be less than if Labour were still in power.

  5. zorro
    March 10, 2011

    The interest cost on the debt is one of the reasons why they are pursuing ZIRP, and they are scared witless of bursting the housing bubble which they will have to do if we are ever to consolidate and grow again. A case of ‘reculer pour mieux avancer’.

    Another case of gross council posturing came to my notice. Haringey Council obviously needed to shut old peoples homes and services to vulnerable people to help pay for a new ‘Director of Planning and Sustainability’ at 140,000 pounds per year ……(source: The Guardian)


  6. Duyfken
    March 10, 2011

    Thanks to JR for getting these figures for us. But why does it need an expert such as he to provide this service. Surely the government could and should publish prominently a periodical (quarterly?) and simple statement of income and expenditure, showing figures a) projected b) actual and c) actual for the preceding year, of
    Interest on debt
    Expenditure of each government department
    Government income, suitably categorised
    Annual result
    with a brief commentary of expenditure and reasons for it varying (if so) from original budgets.

    With something as clear-cut as this, we the impoverished tax-payers may keep better track. Perhaps there is some such publication of summary figures but I have failed to find it beyond wading through impenetrable tables of the ONS.

  7. Ian Wragg
    March 10, 2011

    Its crazy for expenditure to still be running 6% above last year especially when this is attributable to interest charges to service the debt.
    Government spending should have been frozen at last years level for the full Parliament and that would have been a real cut.
    Eventually the bond markets will wake up and force a massive reduction in spending by refusing to buy Government bonds. Then Labour will have something to crow about.

  8. Robert
    March 10, 2011

    ”The worrying figure was debt interest. At £36.7 billion for April 2010-January 2011, it was 47% higher than the same period in the previous year, showing the impact such high borrowing levels has and will have on public spending and the public accounts. Debt interest now costs more than the Ministry of Defence.” John – I would have a bet that this could rise to nearly 70bn at its peak before it falls . This is assuming that Public Sector Net Debt rises to 1262bn in 2013-14.

  9. waramess
    March 10, 2011

    I wish that my bank manager might be just as understanding: that my rate of spending might decline whilst my indebtedness continues to increase and that he might accept my future pay rises will eventually sort out my current indebtedness.

    The only reason why this is accepted is because everyone else is in a similar mess, however with backs to the wall, we can only hope that new offshore oil finds are around the corner because that is the only growth we can hope for.

  10. English Pensioner
    March 10, 2011

    When I get my Council Tax bill, I also get a statement from the council as to where the money is being spent in reasonably simple terms. I also get one from the Police Authority showing how they spent their share of the money.
    The Government made the councils do this, isn’t it time the government did the same, providing a breakdown of their expenditure, along with statements from each Department as to how they spent their cut?
    I know it is probably available in various government documents if one searches hard enough, but why shouldn’t the government follow exactly the same approach as they demand from our councils?

  11. Steve Cox
    March 10, 2011

    Dear God, (will I get in trouble for making a Christian remark, ha, ha?), if it’s good news that spending is, ahem, “only” 6% up on the same period the previous year, then please spare me the bad news.

    Or is Mr. Osborne’s plan to deliberately push inflation up above 6% (never mind all those boring old Tory voters with savings in the bank) so that, in real terms, public spending is actually being cut? If so, it’s immoral and a deliberate deceit.


  12. Damien
    March 10, 2011

    The UK ‘enjoys’ a preferential Gilt rate on its government debt of around 3.71%, partially because of our austerity proposals and also because we are not in the euro. Nevertheless that rate is vulnerable to the negotiations at the EU tomorrow on the proposed permanent e500 bn rescue system for the PIGS. Further agreement to that package is predicated to the dreaded ” closer fiscal and economic policy co-ordination”.

    As I see it we face 2 scenarios. The first is that Frau Merkel who is facing local elections on 27th March will along with the Dutch and Finns will not want to commit political suicide by agreeing the package. Why should the prudent bailout the feckless on more favorable terms than they have already agreed to?

    The second scenario follows from that there is a ‘restructuring’ of debt by the PIGS. That would effect UK financial stability and increase our rate because of our direct holdings of Irish sovereign debt, including the UK holding of securities issued by Irish banks and other assets and loans exposure in Ireland. For example as the government is the biggest shareholder in RBS we know that it has a £53 bn exposure to Irish debt, of which the british taxpayer therefore is underwriting £40 bn.

    We are stuck between a rock and a hard place. Either there is agreement on closer fiscal and economic policy co-ordination (we know that means further loss of sovereignty ) and further bailout of the PIGS, underwritten by UK taxpayers or we face the fallout by way of a haircut on our loans to our neighbors in Europe.

    There is the issue of £500 bn of commercial bonds due in the end of 2012, but for now lets just say a rolling loan gathers no moss.

    The ratings agencies have already factored the risk of restructuring into the rate for Greek debt at 12.9%, Ireland 9.58% and Portugal at 7.63%

  13. J leslie smith
    March 11, 2011

    Our interest payments on the National Debt are more than our total annual Defence Budget. Does not anyone consider this a very serious issue? Yet, I hear no Government Minister banging on about it daily, which they should be. What will they say, as Oil increase in price, ten inflation doubles resulting in our DEBT INTEREST amounting to more than the costs of our National Health Service? Surely the Public will soon realise that these huge National Debts must be drastically reduced and quickly? Cuts, and more Cuts, are the only way that can be done. As all debts must be repayed, with interest, unless the Country decides to make itself bankrupt and default on its loans and debt interest. With our Unions, Police, Civil Service and Politicians “All in it Together” regarding keeping their gold plated pensions, what chance do we have collectively of seriously reducing Public Debt, before we reach the stage where we do not have the Foreign Currency left to pay our monthly Oil Bill? ( and other essential imports)

  14. Lindsay McDougall
    March 12, 2011

    The coalition strategy for this parliament is that total public expenditure should remain constant in real terms. Anybody doubting this should look at the forecasts for public expenditure in cash terms and for inflation given in annexes to the June 2011 budget report.

    Given that inflation is running at about 4%, that means that public expenditure in cash terms should be growing at 4%, not 6%. The coalition has not yet delivered.

    While I am about it, let me knock this Plan B nonsense on the head. The fact is that if we don’t get the GDP growth that we hope for, then we have to reduce projected public expenditure EVEN MORE.

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