In yesterday’s press we learned that the Autumn Statement this week will include substantial extra sums for the NHS budget, and an enlarged roads programme.
This does not represent an increase compared to original plans for this year set out in the summer of 2010 by the new Coalition government, though it does represent a shift of priorities within the budget totals.
In June 2010 the government announced that it would increase total managed spending from the £669bn of the last Labour year to £737.5bn by 2014-15. Current spending would go up faster, at the expense of capital projects. Current spending was forecast to rise from Labour’s £600 bn to £693 bn by 2014-15.
In March of this year the Treasury published new forecasts for 2014-15 and beyond. They then estimated £680 bn for current spending, down on the 2010 forecast, with higher investment producing a total expenditure figure of £732 billion, down a little on the 2010 forecast.
These figures illustrate that the government has kept current spending under control as it wished to do, and has been able to increase capital spending whilst still keeping the totals below the original forecasts.
The higher deficit than planned is entirely down to weaker revenues, not to higher spending. Most people think spending has been cut heavily, though these figures(as I pointed out originally) meant some quite substantial cash increases in some areas, and allowed small real growth overall, with some departments nonetheless suffering cuts. In explaining the higher deficit, however, we need to explain deviations from the original plans. The adverse ones are all on the revenue side.
As I have explained throughout we are borrowing substantial sums in order to sustain further cash increases in public spending. This Autumn Statement is unlikely to bust the spending limits of 2010, and will allow more investment at the expense of current costs.