How Cameron disguised the true level of cuts

The Prime Minister attempted to hide extra cuts by the coalition in his speech on public service ref

In his speech on public-service reform yesterday, David Cameron attempted to assuage fears over the coalition's spending cuts. He said:

[When] we're done with these cuts, spending on public services will actually still be at the same level as it was in 2006. We will still be spending 41 per cent of our GDP on the public sector.

The Prime Minister's words were deceptive on two levels. First, he omitted to mention that this represents a reduction of more than 6 per cent of GDP (see table B2). Under Margaret Thatcher, spending fell by an equivalent amount (from 45.1 per cent of GDP to 39.2 per cent) but over 11 years, not five. Even then, the fall was largely due to economic growth, not spending cuts.

As I've pointed out before, during the Iron Lady's time in office, spending rose by 1.1 per cent a year on average - the reason why it was so absurd for Nick Clegg to vow that there would be no return to the "savage cuts" of the 1980s.

Cameron was also wrong to claim that spending will be 41 per cent of GDP "when we're done with these cuts". True, spending will be 41.8 per cent in 2013-2014 but, as the graph below shows, it will fall again to 40.4 per cent in 2014-2015 and to 39.3 per cent in 2015-2016. Thus, the Prime Minister hid additional spending reductions of nearly 2 per cent of GDP. After the coalition's programme of cuts is complete, spending will actually be at the same level as it was in 2004, not 2006.

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Another significant detail is that the government's spending cuts are permanent, not temporary. When asked by a Fire Brigade worker last summer if funding would be restored once the deficit has been addressed, Cameron replied:

The direct answer to your question, should we cut things now and go back later and try and restore them later, [is] I think we should be trying to avoid that approach.

The Prime Minister's insistence that we should try to "avoid that approach" reveals an ideological attachment to the small state and to low levels of spending. The result will be permanently shrunken public services. Cameron is free to argue for this position, but next time he should do so on the basis of fact, not myth.

UPDATE: I should have pointed out that spending under Thatcher reached a peak of 48.1 per cent in 1982-83 before falling to 38.9 per cent in 1988-89, a reduction of 9.2 per cent, larger than the 8.1 per cent reduction planned by the coalition. But my substantive point stands: Cameron is hiding the true extent of the cuts.

George Eaton is political editor of the New Statesman.

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Forget planning for no deal. The government isn't really planning for Brexit at all

The British government is simply not in a position to handle life after the EU.

No deal is better than a bad deal? That phrase has essentially vanished from Theresa May’s lips since the loss of her parliamentary majority in June, but it lives on in the minds of her boosters in the commentariat and the most committed parts of the Brexit press. In fact, they have a new meme: criticising the civil service and ministers who backed a Remain vote for “not preparing” for a no deal Brexit.

Leaving without a deal would mean, among other things, dropping out of the Open Skies agreement which allows British aeroplanes to fly to the United States and European Union. It would lead very quickly to food shortages and also mean that radioactive isotopes, used among other things for cancer treatment, wouldn’t be able to cross into the UK anymore. “Planning for no deal” actually means “making a deal”.  (Where the Brexit elite may have a point is that the consequences of no deal are sufficiently disruptive on both sides that the British government shouldn’t  worry too much about the two-year time frame set out in Article 50, as both sides have too big an incentive to always agree to extra time. I don’t think this is likely for political reasons but there is a good economic case for it.)

For the most part, you can’t really plan for no deal. There are however some things the government could prepare for. They could, for instance, start hiring additional staff for customs checks and investing in a bigger IT system to be able to handle the increased volume of work that would need to take place at the British border. It would need to begin issuing compulsory purchases to build new customs posts at ports, particularly along the 300-mile stretch of the Irish border – where Northern Ireland, outside the European Union, would immediately have a hard border with the Republic of Ireland, which would remain inside the bloc. But as Newsnight’s Christopher Cook details, the government is doing none of these things.

Now, in a way, you might say that this is a good decision on the government’s part. Frankly, these measures would only be about as useful as doing your seatbelt up before driving off the Grand Canyon. Buying up land and properties along the Irish border has the potential to cause political headaches that neither the British nor Irish governments need. However, as Cook notes, much of the government’s negotiating strategy seems to be based around convincing the EU27 that the United Kingdom might actually walk away without a deal, so not making even these inadequate plans makes a mockery of their own strategy. 

But the frothing about preparing for “no deal” ignores a far bigger problem: the government isn’t really preparing for any deal, and certainly not the one envisaged in May’s Lancaster House speech, where she set out the terms of Britain’s Brexit negotiations, or in her letter to the EU27 triggering Article 50. Just to reiterate: the government’s proposal is that the United Kingdom will leave both the single market and the customs union. Its regulations will no longer be set or enforced by the European Court of Justice or related bodies.

That means that, when Britain leaves the EU, it will need, at a minimum: to beef up the number of staff, the quality of its computer systems and the amount of physical space given over to customs checks and other assorted border work. It will need to hire its own food and standards inspectors to travel the globe checking the quality of products exported to the United Kingdom. It will need to increase the size of its own regulatory bodies.

The Foreign Office is doing some good and important work on preparing Britain’s re-entry into the World Trade Organisation as a nation with its own set of tariffs. But across the government, the level of preparation is simply not where it should be.

And all that’s assuming that May gets exactly what she wants. It’s not that the government isn’t preparing for no deal, or isn’t preparing for a bad deal. It can’t even be said to be preparing for what it believes is a great deal. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.