How Osborne manipulated spending to claim the deficit is falling

The IFS warns that the £10.9bn underspend is not an "economically optimal allocation of spending".

One of the biggest surprises in George Osborne's Budget speech was his announcement that the deficit is forecast to fall this year (although excluding all "special factors" it's actually set to rise). With borrowing so far this year £5.3bn higher than in 2012, it seemed there was no escape for the Chancellor. 

For the first time since he entered the Treasury, he would be forced to announce that the deficit was expected to rise in annual terms and Ed Balls would have his revenge (Osborne memorably bamboozled the shadow chancellor in last year's Autumn Statement by banking the 4G auction receipts early).

But yesterday, against expectations, he was able to announce that the deficit was forecast to be £120.9bn this year (2012-13), £100m less than last year (2011-12). So how did he do it? The answers are becoming clearer today. First, Osborne is forcing government departments to underspend by a remarkable £10.9bn in the final months of this financial year (including a £2.2bn NHS underspend). While some of this underspend is permanent, the rest, as the OBR document noted (see p.93) has been moved forward into future years. Public spending, it appears, has been manipulated in order to allow Osborne to boast that the deficit has fallen again. 

At its traditional post-Budget briefing, the Institute for Fiscal Studies called the Chancellor out on his financial trickery. Noting that the £10.9bn was around double the average of the previous five years (see graph), IFS head Paul Johnson said

There is every indication that the numbers have been carefully managed with a close eye on the headline borrowing figures for this year. It is unlikely that this has led either to an economically optimal allocation of spending across years or to a good use of time by officials and ministers.
 
That the deficit is forecast to shrink by the minimum amount required for Osborne to claim that borrowing has fallen (£100m) is clear evidence that the underspend was motivated by political calculations, rather than economic ones.
 
As well as squeezing Whitehall spending, Osborne also saved money by, in the words of the OBR, delaying payments to some "international institutions" until next year. When I spoke to the Treasury press office, they cited the example of a £15m payment by the Department for International Development to Green Africa Power. The spokesman refused to confirm whether the institutions affected included the UN and the World Bank. Regardless, it is now clear that Osborne's creative accounting puts Gordon Brown to shame. 
Chancellor of the Exchequer George Osborne leaves number 11 Downing Street in central London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The surprising truth about ingrowing toenails (and other medical myths)

Medicine is littered with myths. For years we doled out antibiotics for minor infections, thinking we were speeding recovery.

From time to time, I remove patients’ ingrowing toenails. This is done to help – the condition can be intractably painful – but it would be barbaric were it not for anaesthesia. A toe or finger can be rendered completely numb by a ring block – local anaesthetic injected either side of the base of the digit, knocking out the nerves that supply sensation.

The local anaesthetic I use for most surgical procedures is ready-mixed with adrenalin, which constricts the arteries and thereby reduces bleeding in the surgical field, but ever since medical school I’ve had it drummed into me that using adrenalin is a complete no-no when it comes to ring blocks. The adrenalin cuts off the blood supply to the end of the digit (so the story goes), resulting in tissue death and gangrene.

So, before performing any ring block, my practice nurse and I go through an elaborate double-check procedure to ensure that the injection I’m about to use is “plain” local anaesthetic with no adrenalin. This same ritual is observed in hospitals and doctors’ surgeries around the world.

So, imagine my surprise to learn recently that this is a myth. The idea dates back at least a century, to when doctors frequently found digits turning gangrenous after ring blocks. The obvious conclusion – that artery-constricting adrenalin was responsible – dictates practice to this day. In recent years, however, the dogma has been questioned. The effect of adrenalin is partial and short-lived; could it really be causing such catastrophic outcomes?

Retrospective studies of digital gangrene after ring block identified that adrenalin was actually used in less than half of the cases. Rather, other factors, including the drastic measures employed to try to prevent infection in the pre-antibiotic era, seem likely to have been the culprits. Emboldened by these findings, surgeons in America undertook cautious trials to investigate using adrenalin in ring blocks. They found that it caused no tissue damage, and made surgery technically easier.

Those trials date back 15 years yet they’ve only just filtered through, which illustrates how long it takes for new thinking to become disseminated. So far, a few doctors, mainly those in the field of plastic surgery, have changed their practice, but most of us continue to eschew adrenalin.

Medicine is littered with such myths. For years we doled out antibiotics for minor infections, thinking we were speeding recovery. Until the mid-1970s, breast cancer was routinely treated with radical mastectomy, a disfiguring operation that removed huge quantities of tissue, in the belief that this produced the greatest chance of cure. These days, we know that conservative surgery is at least as effective, and causes far less psychological trauma. Seizures can happen in young children with feverish illnesses, so for decades we placed great emphasis on keeping the patient’s temperature down. We now know that controlling fever makes no difference: the fits are caused by other chemicals released during an infection.

Myths arise when something appears to make sense according to the best understanding we have at the time. In all cases, practice has run far ahead of objective, repeatable science. It is only years after a myth has taken hold that scientific evaluation shows us to have charged off down a blind alley.

Myths are powerful and hard to uproot, even once the science is established. I operated on a toenail just the other week and still baulked at using adrenalin – partly my own superstition, and partly to save my practice nurse from a heart attack. What would it have been like as a pioneering surgeon in the 1970s, treating breast cancer with a simple lumpectomy while most of your colleagues believed you were being reckless with your patients’ future health? Decades of dire warnings create a hefty weight to overturn.

Only once a good proportion of the medical herd has changed course do most of us feel confident to follow suit. 

This article first appeared in the 20 April 2017 issue of the New Statesman, May's gamble

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