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The things they say, part 1: ‘The cuts aren’t that bad’

Government supporters say the cuts aren't that deep. In a new series Duncan Weldon puts their claims to the test.

As the economy slows and the cuts begin to bite, backers of austerity have put forward a series of claims justifying government policy. In this new series I'll be putting them under the microscope.

Today I’ll deal with the ‘big one’: that the cuts aren't that deep – or even that there aren’t any cuts.

Spectator editor Fraser Nelson has recently argued:

'Isn’t it odd that so many people talk about cuts without ever attempting to quantify them? That’s because this would spoil the whole fun. Total state spending is due to fall by 0.6 per cent over the financial year which has just begun. Then 1.1 per cent, 1.3 per cent, and, finally, 0.8 per cent in 2014-15. Oddly, these figures are not included in the (extensive) Budget documents. The basic question – ‘how much is the government cutting in total?’ has no answer. Little wonder it’s open to such misrepresentation.'

The statistical trick that Nelson is using is to talk in terms of ‘total state spending’. This includes what could be termed the ‘costs of the crisis’ – rising debt interest payments and increased spending on jobseekers' allowance.

To get a better sense of how the cuts will actually impact public services, one needs to look at ‘departmental spending limits’ or DEL. This is the money actually spent by departments on things like education, health services, policing – what we normally think of as government spending.

Rather than taking my word for this, or indeed Fraser’s, I’d highly recommend this presentation from the well respected Institute of Fiscal Studies, given in October straight after the spending review.

The IFS state that in the coming years spending on public services will be the ‘tightest since April 1975 to March 1980’. Not something that can be lightly dismissed.

Left Foot Forward put the IFS DEL numbers into chart form, which gives some sense of the scale of the cuts:

Departmental spending as percentage of GDP

This shows departmental spending as a percentage of GDP (national income) since the late 1990s.

As can clearly be seen over the next five years it is forecast to fall back to late 1990s levels – a time when the Labour government was sticking to Tory spending plans after nearly two decades of under-investment in basic public services.

The IFS provide some long-run historic context for the scale of the coming cuts:

So, according to the experts, overall spending will be the most constrained in 65 years, departmental spending will be the harshest in 30 years and the NHS is looking at its worst financial settlement in 55 years. The cuts are not ‘small’.

Duncan Weldon is senior policy officer at the TUC and blogs at Touchstone.

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