Why Osborne's cuts aren't "soft"

The misleading claim that Osborne is only cutting spending by one per cent a year.

Supporters of George Osborne's economic strategy have made it their mission to convince the world that his cuts are not harsh, savage or draconian but are in fact "soft", "mild" and "insignificant". It's a smart tactic designed to make Labour's opposition to the cuts look hysterical and economically deluded.

The most prominent and articulate exponent of this view is Spectator editor Fraser Nelson. In a blog published yesterday, he wrote: "Osborne's cuts aren't harsh or drastic: they're mild and probably insufficient. There's almost no organisation on the planet that agrees with Balls that cuts of less than 1 per cent a year are too harsh and too fast -- he ends up looking like a loser."

Nelson's figures aren't wrong - Osborne really is cutting spending by just 0.6 per cent this year and by just 3.7 per cent across this Parliament. But they are deeply misleading. The figure for total cuts includes non-discretionary spending such as welfare benefits (the "automatic stabilisers" Osborne recently referred to) and debt interest, masking the true extent of the coaliton's squeeze on public services.

The Treasury table below, which looks at departmental spending in isolation, shows what all the fuss is about. The Home Office is being cut by 25 per cent (see the final column). Education is being cut by 11 per cent. Transport is being cut by 15 per cent. The Foreign Office is being cut by 28 per cent.

The total cut to departmental spending is 11 per cent, the largest, as the IFS has noted, since 1945. If we strip out the NHS and International Development - the ring-fenced departments - the total cut is 19 per cent.

I should add that higher inflation means that the cuts will be even worse. The NHS, for instance, which was due to receive a small real-terms increase, will now suffer a small real-terms cut (the reason why it was so foolish for Cameron to "guarantee" last week that spending would rise).

A

Another tactic beloved of the right (most notably John Redwood) is to point out that spending, in defiance of Osborne's cuts, continues to rise. Gordon Brown's government spent £50.6bn in May 2010 but Cameron's splashed £54.1bn last month. What's more, the latest Treasury figures show that total state expenditure, which stood at £669.7bn in 2009-10, will be £743.6bn by 2014-15. The cuts are all in the left's head.

But the claim that the cuts are mythical is only achieved by the old trick of measuring public spending in cash terms, rather than as a percentage of GDP. The latter is by far the more sensible measure. At times of economic expansion, it is only reasonable to assume that some of the proceeds of growth will go towards improving public services, and public-sector inflation is typically higher than the average growth in prices.

If we look at public spending as a proportion of GDP, the true picture emerges. The cuts will reduce public spending from 47.6 per cent of GDP in 2010/11 to 41.0 per cent in 2014/15. For many on the right, this is still an unacceptably high level of expenditure. But one can hardly deny that it represents a substantial reduction in the scope and size of the state's activities.

Rather than hiding behind misleading figures, it would be more intellectually honest of the right to make the case for Osborne's cuts, red in tooth and claw. Once the coalition's squeeze is complete, their statistical conjury won't fool anyone.

George Eaton is political editor of the New Statesman.

Show Hide image

Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland