I am pleased that my critics now accept that current public spending is rising 2010, 2011 and 2012 in real terms as well as in cash.
They now say it will fall in real terms in 2013-15. That is certainly what the government forecast says. The latest Red Book figures are for a fall of 1.1% in 2013 , of 2.1% in 2014 and 2.8% in 2015.
The same Red Book says that current public spending will rise every year in cash terms over that period. They quote March rather than December year ends. The figures are for a 1.3% increase 2013-14, a 1.9% increase 2014-15 and 1.6% increase 2015-16.
In other words, the offfical forecast assumesa big surge in public sector inflation in the second half the Parliament. Roughly it assumes that 2013 will bring inflation of 2.4%, 2014 inflation of 4% and 2015 4.4%. These figures amalgamate a March and December year end as there is no quarterly split provided by the government,but will not be far out.
If instead public sector inflation could be held around 1.6% per annum during that three year period there would be no need for any overall real cuts. Wouldn’t that be a sensible aim for policy makers and public sector managers? Why allow such rapid inflation when spending is so tight?