Plans go far beyond even what fiscal conservatives would view as strictly necessary. Photo: Getty
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Planned spending cuts go far beyond what is needed to end borrowing

The big news is what George Osborne didn’t mention.

Growth is up this year – but in return will be lower than expected in previous years. Tax receipts have disappointed, and have been revised downwards in the coming years too. This much was generally expected. But the good news is George Osborne is still on track. Statistical revisions this year have helped a bit. Lower than expected interest payments have helped a lot.

The coalition plan is still in line with the Conservatives’ mission to eliminate borrowing by 2018-19. Public sector debt is expected to start falling in the middle of the next parliament. But to keep up with borrowing targets when taxes are looking weak, more cuts are being pencilled in – from 2016-17 to 2018-19, departmental spending is being squeezed even further than previously expected, by around £5.8bn a year on average.

But there is more going on here than simply some extra cuts being pencilled in (yet again) to ensure that the public finances stay on track to meet the fiscal targets.

Not mentioned in the Chancellor’s speech, but quickly apparent from the OBR’s report is that the current government is planning spending cuts that would go far beyond what is needed to eliminate borrowing. Although borrowing will have turned into a surplus by 2018-19, the OBR’s figures show that the current government plans to keep cutting beyond that, to create an overall annual surplus – after including investment as well as day-to-day spending – of over £23bn by the end of the next parliament.

Compared to holding departmental spending flat as a share of GDP, that amounts to a cut of £14.5bn. The result is that the government is now only 40 per cent of the way through its cuts to departmental spending, with the OBR expecting the remaining 60 per cent to come after the election.

What exactly are the Conservatives trying to achieve here? Their plans appear to go far beyond even what fiscal conservatives would view as strictly necessary. Even their plan to entirely eliminate borrowing, including borrowing to fund investment that boosts growth, is questionable.

IMF research shows that government investment, such as spending on infrastructure, can raise GDP with no overall rise in public debt. So a target to entirely eliminate borrowing for investment makes little economic or fiscal sense. And given that we have somehow managed to reduce government interest payments whilst debt is still increasing suggests that now is still an excellent time to borrow for investment in growth.

The government has given the public no rationale for these extra cuts. As a proportion of GDP, government spending is being taken back to the level last since in 1938. If there was room for doubt before, there appears to be little now. A dramatically smaller state, not fiscal credibility, is the real goal here.

Nida Broughton is Chief Economist at the Social Market Foundation

Nida Broughton is Senior Economist at the Social Market Foundation.

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A swimming pool and a bleeding toe put my medical competency in doubt

Doctors are used to contending with Google. Sometimes the search engine wins. 

The brutal heatwave affecting southern Europe this summer has become known among locals as “Lucifer”. Having just returned from Italy, I fully understand the nickname. An early excursion caused the beginnings of sunstroke, so we abandoned plans to explore the cultural heritage of the Amalfi region and strayed no further than five metres from the hotel pool for the rest of the week.

The children were delighted, particularly my 12-year-old stepdaughter, Gracie, who proceeded to spend hours at a time playing in the water. Towelling herself after one long session, she noticed something odd.

“What’s happened there?” she asked, holding her foot aloft in front of my face.

I inspected the proffered appendage: on the underside of her big toe was an oblong area of glistening red flesh that looked like a chunk of raw steak.

“Did you injure it?”

She shook her head. “It doesn’t hurt at all.”

I shrugged and said she must have grazed it. She wasn’t convinced, pointing out that she would remember if she had done that. She has great faith in plasters, though, and once it was dressed she forgot all about it. I dismissed it, too, assuming it was one of those things.

By the end of the next day, the pulp on the underside of all of her toes looked the same. As the doctor in the family, I felt under some pressure to come up with an explanation. I made up something about burns from the hot paving slabs around the pool. Gracie didn’t say as much, but her look suggested a dawning scepticism over my claims to hold a medical degree.

The next day, Gracie and her new-found holiday playmate, Eve, abruptly terminated a marathon piggy-in-the-middle session in the pool with Eve’s dad. “Our feet are bleeding,” they announced, somewhat incredulously. Sure enough, bright-red blood was flowing, apparently painlessly, from the bottoms of their big toes.

Doctors are used to contending with Google. Often, what patients discover on the internet causes them undue alarm, and our role is to provide context and reassurance. But not infrequently, people come across information that outstrips our knowledge. On my return from our room with fresh supplies of plasters, my wife looked up from her sun lounger with an air of quiet amusement.

“It’s called ‘pool toe’,” she said, handing me her iPhone. The page she had tracked down described the girls’ situation exactly: friction burns, most commonly seen in children, caused by repetitive hopping about on the abrasive floors of swimming pools. Doctors practising in hot countries must see it all the time. I doubt it presents often to British GPs.

I remained puzzled about the lack of pain. The injuries looked bad, but neither Gracie nor Eve was particularly bothered. Here the internet drew a blank, but I suspect it has to do with the “pruning” of our skin that we’re all familiar with after a soak in the bath. This only occurs over the pulps of our fingers and toes. It was once thought to be caused by water diffusing into skin cells, making them swell, but the truth is far more fascinating.

The wrinkling is an active process, triggered by immersion, in which the blood supply to the pulp regions is switched off, causing the skin there to shrink and pucker. This creates the biological equivalent of tyre treads on our fingers and toes and markedly improves our grip – of great evolutionary advantage when grasping slippery fish in a river, or if trying to maintain balance on slick wet rocks.

The flip side of this is much greater friction, leading to abrasion of the skin through repeated micro-trauma. And the lack of blood flow causes nerves to shut down, depriving us of the pain that would otherwise alert us to the ongoing tissue damage. An adaptation that helped our ancestors hunt in rivers proves considerably less use on a modern summer holiday.

I may not have seen much of the local heritage, but the trip to Italy taught me something new all the same. 

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear