THE CLAIM: THE COALITION GOVERNMENT IS CUTTING PUBLIC SPENDING THIS YEAR BY JUST £2BN LESS THAN LABOUR PLANNED TO
AS the coalition gets ready to swing the axe on public services, it is busy reminding voters that Labour also planned to make big cuts if it won the election.
George Osborne (right) claims that Alistair Darling (far right) planned to cut public spending by just £2bn less in 2011-12 than the coalition is doing.
It appears that the chancellor wants to have his cake and eat it. He consistently says that Labour’s cuts were too unambitious but now suggests that the coalition’s aren’t much more severe.
But a billion pounds here or there makes little difference to the bond markets. So how can Osborne make such a claim?
In one sense, Osborne is right. According to the March 2010 Budget, Darling planned around £14bn of cuts in 2011-12. Adjusting for an extra £2bn of capital spending, announced in the coalition’s first spending review, the current government will make cuts of £16bn in 2011-12 – meaning the difference is £2bn.
However, Labour wouldn’t have made any cuts in 2010-11, whereas the coalition made cuts of £5.2bn.
So by the end of 2011-12, Labour would have cut spending by £14bn, while the coalition’s cuts will be £21bn, a difference of £7bn. And over the parliament, the coalition is cutting spending by £83bn against Labour plans for £52bn of cuts – a difference of £31bn.
Osborne can technically claim that he is cutting spending by just £2bn less than Labour in 2011-12, although he is being slightly disingenuous. Overall, Labour’s spending cuts are much less severe than the coalition’s.
In truth, the whole debate is somewhat flawed, because total managed expenditure (TME) – which includes debt repayments – will continue to rise in cash terms over the entire parliament.
In real-terms, the cuts to TME are very small: 1.54 per cent in 2011-12; 0.39 per cent in 2012-13; and 0.44 per cent in 2013-14. In the last year of the parliament (2014-15) TME will actually rise slightly, by 0.14 per cent.