151124 Public spending since 1979

DEL and AME… Usually, when I spend some quality time with the public spending statistics, I like to distinguish between Departmental Expenditure Limits and Annually Managed Expenditure. The former, as I’ve explained in a previous To The Point post, is spending that the Government controls more or less directly, and it does so in Spending Reviews like tomorrow’s. The latter is spending, such as on social security or debt interest, that is less controllable because it fluctuates with the wider economy.

…don’t go back in time. Except there are no DEL and AME figures for before 1997, at least not ones comparable to now – so what’s a guy to do if he wants to gaze back beyond then? An answer comes in the form of this tremendous spreadsheet from the Institute for Fiscal Studies. It covers all the years from 1948, distinguishing between the money that’s spent on public services such as defence, education and healthcare, etc. and the money that’s spent on both social security and debt interest. It’s not quite DEL and AME, but it’s useful nevertheless.

Osborne’s flattening… I’ve used the IFS figures to produce the graph above. It portrays the fiscal consolidation of recent and coming years as a Great Plateauing. Once inflation is accounted for, spending on public services (as shown by the dark blue bar) goes from a peak of £525.1 billion in 2009-10 to an expected £485.7 billion in 2017-18, and then back up to £509.1 billion by 2020-21. Spending on social security and debt interest (the pink bars) goes from £257.1 billion in 2011-12 to £249.4 billion last year, and then back up to £256.8 billion in 2019-20.

…of Brown’s mountain. If you don’t believe that this is a proper consolidation, try telling it to the ministers who have had their budgets cut by 20, 30, 40 per cent over the last Parliament, and face the same again over this Parliament – or, indeed, to the claimants whose benefits have been reduced. Alternatively, just compare it to the New Labour years. In the ten years before they left power, total spending rose by 52 per cent in real terms. In the ten years after, it’s expected to decline by 2 per cent. George Osborne has turned a flood into something less than a trickle.

What about Thatcher? Or compare it to the Thatcher years. That was a period of restraint too, although total spending did still rise by about 10 per cent between 1979 and 1990. The light blue and pink lines on the graph show this in terms of GDP. Spending on public services fell by 7.4 percentage points, as a proportion of GDP, between 1980-81 and 1988-89. Spending on social security and debt interest fell by 3.3 percentage points between 1985-86 and 1989-90. And what are Osborne’s equivalent figures? 7.7 and 2.7, so long as the forecasts are right. But that’s without as strong an economy, more through actual cuts.

Link-a-rama. My point? Well, that’s kind of it. I hope you don’t mind if I finish with links to ten old To The Point posts, which may be relevant ahead of tomorrow:

  1. How spending plans change
  2. How governments tend to borrow more than they expect
  3. What Osborne means when he talks about 30 per cent cuts
  4. The UK’s slow slide down the military spending chart
  5. What Osborne was planning with Tax Credits
  6. Will the Government cut the Civil Service down to 380,000 staff?
  7. How the Chancellor went back to 2010 for his latest Budget
  8. Who gets what from our welfare system?
  9. How Labour overspent in the good times
  10. How the Coalition changed its mind about spending

31 comments for: The grand context for tomorrow’s Spending Review

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