by Peter Franklin
Wednesday, 13
October 2021
Chart
17:07

Is Boris spending like a drunken sailor?

Beyond Covid, there have been big shifts in Government spending
by Peter Franklin
Steady on, old boy.

It’s all spend, spend, spend with this government. The days of austerity under David Cameron and George Osborne are long gone. 

Or are they?

Obviously we’ve seen extraordinary levels of expenditure in response to the Covid pandemic. Paying millions of workers to stay at home doing nothing doesn’t come cheap. However, the furlough scheme and the other emergency measures are temporary. Rishi Sunak, who became a hero by opening the coffers back in 2020 is now reinventing himself as Mr Tightwad. 

To get an idea of what’s really happening with public expenditure we need to exclude Covid spending and look at the long-term trend in department budgets. 

Here’s a wonderfully clear chart that does just that. It’s the work of Ben Zaranko, an economist at the Institute for Fiscal Studies: 

As you can see, there are some big differences in the spending trends for each department. In most cases budgets were slashed during the austerity years of the Coalition government. There’s been some easing up in more recent years, but usually not enough to take budgets back up to where they were before the 2010 election. Much of the same pattern also applies to local government spending (which is not included in the above chart).  

Even some of the exceptions are misleading. For instance, it looks as though the Department of Environment, Food and Rural Affairs (DEFRA) is now rolling in cash. However, that’s just a Brexit effect — the subsidies that used to be filtered through the EU’s Common Agriculture Policy are now being paid directly by the British government. 

The Department of Health is a genuine exception to the rule. Health spending is up more than a quarter since 2010 — and that’s not including the extra funding for Covid. 

So outside of the NHS, the conclusion is that the government is not in fact spending like a drunken sailor. For most government departments, austerity was real — and is a long way from being reversed. Even the increase in NHS spending is driven by the growing demands of a rapidly ageing population. 

So when the Government’s Right-wing critics call for spending restraint and a smaller state, what do they mean? Given that, in most areas, spending is already way down on 2010 levels — savings can only realistically come from cuts to the NHS, the false economy of slashing capital investment, or abandoning whole areas of government activity. If that’s what they want they should say so. 

As for the Government’s Left-wing critics, they should say how they expect any increase in spending to be financed. Borrowing has exploded during the pandemic and the tax burden is at record levels.

As we approach this month’s Budget, it would be refreshing if we could have a much more honest debate over what the government can actually change. 

Join the discussion


  • “So when the Government’s Right-wing critics call for spending restraint and a smaller state, what do they mean? Given that, in most areas, spending is already way down on 2010 levels — savings can only realistically come from cuts to the NHS, the false economy of slashing capital investment, or abandoning whole areas of government activity. If that’s what they want they should say so.” 
    What is the spending going in to?
    How effective is it?
    What can be more effectively done outside government? What has been done better outside government and how has this improved people’s lives?
    I am not saying this as someone that thinks all government expenditure should be slashed, or who thinks that austerity was a deliberate attempt to k ill the poor, but it would be nice to have an independent auditor/ interviews of the public to give some answers.

  • Da mn lies and statistics and all..

    From the BoE “It appears to be its answer to all the country’s economic problems and by the end of 2021, the Bank will own an eye-watering £875bn of Government bonds and £20bn in corporate bonds. “The scale and persistence of QE—now equivalent to 40% of GDP—requires significant scrutiny and accountability.”

    450 Billion in 2020! 875 Billion British pounds: “BoE voted 7-2 to maintain gilt purchase at £875 bln. 8-1 was expected and Ramsden and Saunders dissented as they wanted a cut QE to £840 bln.”

    Now that is QE, so monitary and not fiscal, but is to keep interest at zero – and that destroys savings and pensions and makes the very wealthy even more very wealthy, wile wrecking the poor and middle class. Inflation rages wile ‘Real Interest (interest you receive on savings Minus inflation) goes down to unseen levels…. (.05% interest on your savings – minus 4.5% inflation = -4.45% NEGATIVE interest)

    Buying the 20 billion corporate bonds? Keep those Zombie corporations alive, and transfer more wealth up.

    This article is pure BS, it is misdirection – ‘ignore the man behind the curtain – just keep looking at the ball in my hand’……

    The huge monetizing of debt, the huge amounts paid out wile closing business, paying to stay home, to shutter business, Trillions! And now the inflation will kill your savings and pensions – and the money had to go somewhere – so the biggest bubble in history has built in equities and real assets (houses – no getting on the ladder now) – and when the bubble bursts – and your savings gone, well, welcome to the bread line you middle, and working, class sheep!

  • One of the effects of COVID and lockdown has been that people have had a pause in the onrush of normal life that has enabled many to reassess what expenditure is necessary for their happiness and what is actually of little value. The same has applied to many businesses. Has the same applied to government expenditure? I suspect not so much – as demonstrated by increasing numbers of highly paid Diversity posts in the NHS – a total waste of money in one of the most diverse organisations in the country.

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