Coffee House

Is Alexander ushering in Austerity Squared?

23 April 2012

23rd April, 2012 — mark it down in your calendars, CoffeeHousers.
For, after weeks of froth and fury about tax, today’s the day when the government focused on spending cuts again. In a speech
to the Institute for Fiscal Studies, Danny Alexander has announced what are, in theory, a couple of new restraints on spending. First, government departments will have to share information about
their spending with the Treasury on a monthly basis, and let Osborne & Co. pore over it. And, second, they will also have to find extra capacity in their existing budgets for unforeseen
expenditure, rather than just relying on the Treasury’s central reserve.

Alexander described these measures as ‘another signal of our unwavering determination to deliver the fiscal consolidation we promised’. Which is a long way of saying that the Treasury
expects every department to do its duty. While it’s true that the departmental spending cuts are broadly on course and on time, it’s also true that the bulk of them are yet to be delivered.
The process could still collapse into a flabby mess. What the Treasury will fear is a repeat of the ‘efficiency drives’ conducted under New Labour: cuts are identified, five year plans
scheduled, numbers published, speeches spoken — and then nothing happens. After all, the spending cuts encoded into the Budget are little more than aspirations. Until they are actually
implemented, then the Exchequer shouldn’t really count on them at all.

And you know what a failure to deliver the planned cuts would mean, don’t you? Yep, deficit reduction would slow, the debt could keep on rising as a percentage of GDP, our AAA credit rating might
be threatened, and so on. Hence why Alexander is eager to lay down the law today. Indeed, I wonder whether his announcements represent the first stage of Austerity Squared, the prospect of which I
wrote about last year. Either way, we’re back to the cuts. Normal service
has been resumed.

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Show comments
  • Anne Wotana Kaye 1

    “The noblest prospect which a Scotchman ever sees, is the high road that leads him to England!”
    Boswell: Life

  • TomTom

    Yes Dimoto, funny how they revise the past figures downwards to cater for the increase and slip under target. It would be hilarious if it weren’t so criminally insane

  • daniel maris

    With Osborne and Alexander, you get Dumb and Dumber.

    When are they going to recognise that it is there massive incompetence that driven us on to the rocks.

  • Dimoto

    As I pointed out last week, the spending figures for February were a scandal, blissfully ignored by the media, obsessed with triviality.

    The deficit was £15.2B, twice the number expected and a new record. It showed all the classic signs of “budget topping” and lax ministerial control.

    Most economists were gob-smacked.

    No doubt Osborne had to make some last minute adjustments to the budget, (estimated £2B under target for the year, versus previous city estimates of £10-16B under target).

    That is all you need to remember.

    Thank God Alexander is finally starting to do his job ! Bring back Laws !!
    It is obvious that these latest measures are to (belatedly) deal with this scandal.

    Forget the vagaries of Cameron-speak, THIS is the most alarming evidence of ministerial/Treasury incompetance.

    Now pay attention everyone !! The figure for the March deficit is due.

  • Dog Snob

    What kind of ‘austerity’ are we talking about, when our domestic departments are ordered to find some £16billion, in the same week as we have agreed to hand over an extra £15billion to the EU?

  • tom jones

    Danny is the best kind of Lib Dem minister, who gets on with the job and doesn’t moan and bitch every 5 minutes. Sure, he and Osborne delivered a badly received budget, but actions speak more than newspaper headlines.

  • TomTom

    “the state schools seem incapable of producing educated people.”

    96% of Secretaries of State for Education has been educated at Public School not State School so are probably unfamiliar with hos they should be run.

  • TomTom

    “there is a monthly comparison of actuals against budget with a variance report. “

    You must encounter very lax businesses Dorothy. Monthly indeed !

  • Daedalus

    What cuts have we had so far? The only austerity I see is in our house were our family income has dropped by 20% following redundancy, a new lower paying job for me and pay freezes for her and thats just in actual take home pay terms, it does not include inflation which will have added another 10%. When is George going to make the government live within our means????? That old saw of sharing in the increase in growth was always a load of old toss but now look at it. It’s time for government to start to share in the drop in growth, fast and deep.

  • Cogito Ergosum

    Why not disband the whole Department of Education. After all, the state schools seem incapable of producing educated people.

    Replace it with one person keeping an eye on the examination system.

  • dorothy wilson

    In any business worth its salt there is an annual exercise in which the departmental heads have to submit their spending plans for the preparation of the budget. Once that budget is approved there is a monthly comparison of actuals against budget with a variance report. That way problems, extravagences and excessive spending can be readily identified and thus slashed. The only question is why it is a big deal when the Teasury attempts to impose similar discipline on government departments.

  • Duyfken

    If we need to cut domestic expenditure, why do we not also insist on cutting the EU contribution?

  • ButcombeMan

    Too late Danny.

    The time for all this was before departments started secretly working up for their annual “end of (financial) year, spend”.

  • normanc

    Just think, if they’d cut spending in the first place we could already be through the worst of it and no one would have noticed, truth be told.

    Instead we’re going to have to endure a charade about doubling down, and all the hot air Labour will produce, and in the end it’s still very unlikely we’ll see spending reduced.

    Plan A – tax & print, bailout & borrow – looks like being with us til the bitter end, and it will be bitter.

  • Mudplugger

    The first tranche of ‘cuts’ have not even scratched the surface,
    Anyone who has worked closely with government knows that you could easily slice 40% of the costs away and still deliver the same services – but that reduces empires and they’ll continue to resist it at every turn.

    Danny Boy may be playing ‘Bad Cop’ but his boss, Gideon, needs to stamp firmly on the utter waste that is involved in most government spending.

  • Nicholas

    Start by cutting the waste of the state and then its size. Cut the subsidies to quangos and fake charities lobbying for left wing policies. Cut stupid jobs no-one needs or wants like diversity co-ordinators and all the other co-ordinators employed in delivering left wing propaganda at taxpayers expense. Cut foreign aid.

    But above all else start doing something about the blood-sucking parasite that is Brussels.

  • Maggie

    If the coalition is looking for ways to cut spending I think they should look more closely at the Arts Council that obviously has money to burn. Not only have they given £200,000 to the Australian Trenton Oldfield that he seems to have spent on buying himself a flat but today we hear about the much trumpeted Shakespeare Festival 2012. They have so much money sloshing around that they’ve chosen to send most of it abroad, where spending is unaccounted for, to foreign “actors” and productions who intend to come to the UK at our expense to enact plays in languages we don’t understand.

    The Arts Council knows no bounds in its numerous campaign to insult the British public and eradicate any entertainment that might appeal to the British public. No doubt, as usual, there are “agents” involved who are raking it in.

  • Pete Hoskin

    Nick: Not sure it’s clear, but I more had departmental spending in mind above.

    Peter From Maidstone: See what you mean — but, on the OBR’s forecasts, the deficit is being reduced year-on-year. And debt is currently forecast to decline as a percentage of GDP in around 2014/15 (although it will have risen before then). See my post on Osborne’s fiscal rules for more context, and why any slippge on debt/GDP could matter immensely:

  • Peter From Maidstone

    Surely the deficit has not been reduced and debt is continuing to increase as a % of GDP? Indeed have we not just spent more money last year than any other Government in history?

  • Robert Eve

    When will the real cuts start?

  • Nick

    Read the red book.

    Spending was increased in real terms (above inflation).

    What austerity?

  • TomTom

    DFID cannot spend the money and needs help. Why not simply spend it in England ? Why not impose an Interest Rate Cap on Credit Card Bills to stimulate Consumption ? Why not stop the Banks extracting REAL resources from the economy with excessive interest charges so the economy can be revived ?

  • kinglear

    And about time too. We’ve had nearly 2 years of NO cuts. Osborne on day 1 should havw said no increase in cash terms for anything AND cuts as well

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