October 13, 2021 - 5:07pm
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:
My favourite chart I've made for a while. Shows that big cuts during austerity years of the 2010s have only been partially reversed for most departments. The Justice budget, for instance, is still set to be 21% lower in 2021−22 than in 2009−10. https://t.co/2N9tTlNUel pic.twitter.com/G6hnda32Mp
— Ben Zaranko (@BenZaranko) October 12, 2021
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.
Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.
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SubscribeOne 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.
“Diversity posts in the NHS – a total waste of money”
The money is not wasted, it is working exceedingly well – the issue is that it is spent to help destroy the West, not to help the West, you just have to understand that. To the Neo-Marxists those Pounds spent that way are a fantastic bang for their buck. Who does not love having a doctor who got there to meet quotas? Who does not love working in an environment where one has to walk on eggshells and mind any word you say and post less you are destroyed by it?
“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.
“What is the spending going in to?”
You know all those freighters anchored outside the ports waiting to unload? Well the spending is obviously going to China.
You shut down local production to ‘Fallow the Science’ and then pay the rest of the World to make your stuff instead, using money just printed out of air…. MMT…..
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!
And why use 2010 as the base? “Shows that big cuts during austerity years of the 2010s”
The GFC (Global Financial Crisis (2007 – 2008)
“By February 2010, the MPC had made £200 billion of purchases, most of which had been of UK government securities (gilts).” QE was born….
Read on QE, (and 2010, QE2) https://en.wikipedia.org/wiki/Quantitative_easing to see what was going on at that time, although Wiki is always half truths and misleading, it does give the basics
The very fact that disaster is called the GFC, and was the worse since the Great Depression, makes it unfair to use as a baseline to anything. Everything to do with finance was crazy then – and now is even madder. This modern Covid Plandemic economic insanity has hit new highs in every metric there is.
Good summary thanks !
Did we have austerity? When was the last time the UK government didn’t run a deficit?
“Tapering” is the minor reduction of QE.
‘Austerity” is the minor reduction of profligacy.
We had massive cuts in real terms to many public services used by many ordinary people, especially those who were poorer. This was especially the case in local government.
The UK has been in debt since the Napoleonic wars. I note that interest on national debt was about 3 times higher in real terms in the 1920s.
https://en.m.wikipedia.org/wiki/History_of_the_British_national_debt
The key to the graph is that those lines aren’t weighted by the size of the budget, it only shows the percentage changes. According to HMRC’s ‘where your taxes went’ pages, in 2019-20 the single biggest line item was welfare, followed by health and the state pension. The DWP seems to have gone down dramatically on that graph – I understand there was pretty severe austerity when it came to benefits, but then state pension spending has only gone up thanks to the triple lock and an aging population so I assume there’s something else going on accounting-wise that isn’t reflected in the graph and means their budget’s smaller than the above would suggest – but with one exception health spending has only ever increased. Hence the constant refrain of “we’re spending more than ever before on the NHS” from the Tories throughout the 2010s, which was true despite the fact no-one cared about it because no-one believed them, and was why they kept running a deficit despite every other part of the gov’t having to make pretty serious cuts.
Why is ‘slashing capital investment’ a false economy? It wouldn’t be if the investment earned a rate of return that was negative or lower than the return to alternative uses. The high-speed train for example has been shown to be likely to be a false investment.