Coffee House

How big are the cuts so far?

25 July 2012

‘Osborne’s austerity is killing the recovery.’ It’s a familiar refrain, one that we hear every time there’s bad economic news. And, sure enough, today’s terrible GDP stats have sparked yet another rendition. Take this, for example, from the TUC’s Brendan Barber: ‘The government’s austerity strategy is failing so spectacularly that is has wiped out the recovery completely.’ But very rarely is that austerity quantified. Just how big are these cuts that have supposedly crippled the British economy?

Well, according to the latest ONS figures, total managed expenditure stayed roughly flat in the coalition’s first year, before being cut by just 1.8 per cent in real terms (£12.6 billion) in 2011-12. But this hides the true extent of the cuts to public services, as it includes the ever-rising benefits bill and our debt interest payments. Stripping these out leaves what the IFS calls ‘public service spending’ — which fell by 3.3 per cent in 2010-11 and a further 4.3 per cent in 2011-12, leaving it 7.3 per cent (£35.2 billion) below 2009-10 levels. But it’s worth remembering that even after those cuts, spending on public services is still higher — in real terms — than it was in 2007-08.

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We can also separate this public service spending into current spending and investment. This reveals that the brunt of the cuts have occurred on the investment side, which is down 47.9 per cent (£24.4 billion) while current public service spending is down just 2.9 per cent (£11.5 billion).

P.S. These latest ONS figures show that last year’s cuts were larger than the OBR forecast in March’s Budget. It predicted cuts of 0.9 per cent in total spending and 2.9 per cent in public service spending in 2011-12, compared to the 1.8 per cent and 4.3 per cent shown here.

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  • RichardH

    There simply isn’t, and never again will be, enough jobs in this country to create full employment. Especially now full employment includes all women too.
    We can’t go back. The days when a man could house and keep a family on his own modest wages are long gone. The feminists can take part of the credit for that hollow victory, the globalists can take the rest.

  • UlyssesReturns

    I liked Disqus but hate this new format. This is UlyssesReturns signing out never to return. I will also be cancelling my subscription.

  • Fubar Saunders

    What happened to the previous comments from earlier on in the day against this article?

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  • Nick

    150 bn a year of Kenysian spending.

    Result – recession.

    It’s voodoo economics to expect borrow and spend to cure a recession caused by borrow and spend.

    • Daniel Maris

      It’s voodoo economics to expect demand to recover by spooking everyone with talk of cuts, job losses, and austerity until 2020 – especially when it’s backed up with real job losses, real attacks on living standards and pensions and real cuts in services.

      You can tighten your belt so much that you stop breathing, you know.

  • James J

    Cameron is supposed to be a PR expert so start communicating with the electorate in an adult manner.
    We can’t afford the present level of welfare provision and the majority of the electorate understand this. He needs to ensure the electorate are aware of what the government means by “deficit” as if you ask the average non-coffee house reader you will be surprised at the answer.
    The public sector makes up too much of the economy and again this needs to be made clear. All figures on the economy should be per capita so we can compare like with like over, say, a decade.
    You will not convince the public on the need for real cuts until the government leads by example in areas such as foreign aid, climate change and the £750 per person we are told today the EU costs us. While money is hosed at these the electorate will not take kindly to making servicemen redundant.

  • Daniel Maris

    Public sector services: ” which fell by 3.3 per cent in 2010-11 and a further 4.3 per cent in 2011-12, leaving it 7.3 per cent (£35.2 billion) below 2009-10 levels”.

    You ought to have a word with Fraser and explain that to him, since he seems unable to understand. The real cuts are probably even deeper since the public sector services will have been carrying the burden of redundancy and severance payments.

    • Nick

      So why is spending up?

      If its all going on the unemployed, we need to seriously consider why we are paying them tens of thousands.

      It’s not.

        • Fubar Saunders

          Not quite sure who youre trying to convince here, David… me or yourself. Part of what the Germans have had is down to attitude, part of it is down to thier political system, part of it has been down to an education system that hasnt been used as a political football to satiate certain politicians prejudices, less internecine behaviour between political parties and trade unions, key sectors and companies not only never having been nationalised by socialists, such as BL and BAE, but them actually producing quality goods th

          • Fubar Saunders

            … that people want to buy… if BMW and Mercedes had been as crap in the 70s as BL were theyd have gone down the gurgler as well. German public transport is funded in a different way to the UK. A nd, dont forget, for many years after reunification, the former West Germany was carrying the East financially, for the best part of ten years if not longer. Its not all as cur and dried as you seem to imagine. All I know is that the political left in the UK have as much chance of delivering on your panacea as they have of knitting fog.

                • Fubar Saunders

                  Dear oh dear. One thing for you to bear on mind, David. The British electorate have only decided on two occasions. 2001 and 2005″ that your party should be trusted with more than one consecutive term of office and that is in the entire history of your party. And even then, when you did have more than one term, it was because youd morphed into what your opposition used to be before it disappeared up its own arse.

                  So, by turning back to the left, following Cruddas and Kinnochio, you think the public are goong to let you back. in for more than one term, you know, the more than one term youre going to need to deliver this panacea that you promise to the poor, the thick and those who need hope more than anything?

                  Do me a favour… All your blurb is, is just that. Blurb. A baited hook, designed to part the stupid and the prejudiced from thier votes in order to line the pockets of yourselves and your nomenklatura for another five years, just like you did between 97 & 09. Youve no intention, let alone the political will or the public finances or the leadership or the willingess to take on vested interests to even begin to achieve any of this.

                  Not only are you a fantasist, youre a snake oil salesman. We’ve been taken in by your like before and wont be so easily fooled again. Whatever your polls tell you now, your whould remember 1992…

                  Now. Be off with you, go and peddle your crap around the LSE or some other hotbed of latent revolutionary fervour….

        • Fubar Saunders

          Youre a fine one to talk about betrayal mate. Remember Lisbon? Remember you 2005 manifesto? Get over yourself mate, youre in the wilderness again, where you belong. Only the terminally stupid would re elect a Labour government…

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