Ed Miliband should focus on public service spending. Photo: Getty
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Referring to 1930s public spending won't help Miliband: here are three charts that will

5 per cent doesn't sound a lot.

I don’t know who is advising Ed Miliband but "public spending back to 1930s levels" wasn’t a good line.

It’s true that the Conservatives' proposed cuts take public spending to its lowest percentage of GDP since the ONS records began but it has been at similar levels in the recent past, notably under Tony Blair in 2000.

Inevitably, therefore, people would say “Well it was like that under your lot and the world didn’t fall apart.” That’s pretty much what Robert Peston skewered him with in an interview yesterday and what John Rentoul was tweeting all afternoon.

But quoting overall  levels of spending to GDP misses the point. It was a very different world in 2000. Nowadays we have pressures on public spending that didn’t exist back then. Increasing pensioner benefit costs, state-funded low wage jobs and subsidised housing leave us with a seemingly intractable social security bill. That and the rising public debt payments eat up a lot of our public spending, so, without tax increases, the cost of deficit reduction must fall on public services. (For some detail behind this see here and here.)

The result is that a 4.7 percent real-terms cut in overall spending since 2010 becomes a 25 percent cut in public service spending. Take out capital spending and look at day-to-day service spending and the cut rises to 27 percent. But the population is rising too so that translates to 31 percent per capita. Because some departments are protected and have their budgets maintained, everything that isn’t health or education faces cuts of around 57 percent. An overall cut of just under 5 percent therefore gets amplified because of other spending pressures.

That might be a bit too complex a message to reduce to political soundbites but three charts from the OBR report last week make the government’s plans very clear.

1. Public service spending falls to its lowest level since 1938

The ONS record only go back to 1948 but the Bank of England’s measure of government consumption, a rough proxy for public service spending, goes back further. This shows overall public service spending falling to a share of GDP last seen in 1938.

This is the opposition’s 1930s message. It’s not public spending, it’s publicservice spending that falls to 1930s levels

2. Day to day public service spending falls to its lowest level since records began 

The ONS records don’t go back far enough to find a time when day-to-day spending was at 12.6 percent of GDP. This amounts to real-terms per capita cuts of a third at a time when an ageing population means the number of people needing help from the state is increasing.
 

3. Spending on everything outside health and education is cut by more than half

Because health and education are protected (and international aid but that’s piddling), real-terms per-capita cuts to everything else are close to 60 percent.

That includes defence and policing (to worry the traditional conservatives) and social services (to worry the lefties).

It’s clear from this that a lot of local government services will simply cease to exist.

No wonder, then, that the Chief Constable of Lincolnshire is warning that his force will fall apart within the next few years.

And that’s pretty much it. Ed Miliband shouldn’t get into discussions about overall public spending because it doesn’t look as if it falls by very much (5 percent doesn’t sound a lot) and it was at similar levels relative to GDP when his lot were in power. He should, instead, focus on the threat to public services.

Last week, George Osborne was rattled by comments from the Institute for Fiscal Studies and, by implication, the forecasts of the OBR. He will probably be less rattled by Ed Miliband’s speech.

Simply by stating the implications of his plans, impartial (or as near is it gets) technocrats are landing stronger punches on the Chancellor than the leader of the opposition. If Ed Miliband is to have a hope of winning the election, he needs to make his punching sharper.

Update: Maybe I’m being a bit harsh. Ed Miliband did say 1930s public services spending at one point in this speech but it then gets muddied by references just to 1930s public spending. He also didn’t make the distinction when Robert Peston questioned him on it.

 

This article was originally published on the blog Flip Chart Fairy Tales, written by @FlipChartRick 

Flip Chart Rick is the author of the Flip Chart Fairy Tales blog

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Former Irish premier John Bruton on Brexit: "Britain should pay for our border checks"

The former Taoiseach says Brexit has been interpreted as "a profoundly unfriendly act"

At Kapıkule, on the Turkish border with Bulgaria, the queue of lorries awaiting clearance to enter European Union territory can extend as long as 17km. Despite Turkey’s customs union for goods with the bloc, hauliers can spend up to 30 hours clearing a series of demanding administrative hoops. This is the nightmare keeping former Irish premier John Bruton up at night. Only this time, it's the post-Brexit border between Northern Ireland and the Republic, and it's much, much worse.   

Bruton (pictured below), Taoiseach between 1994 and 1997, is an ardent pro-European and was historically so sympathetic to Britain that, while in office, he was pilloried as "John Unionist" by his rivals. But he believes, should she continue her push for a hard Brexit, that Theresa May's promise for a “seamless, frictionless border” is unattainable. 

"A good example of the sort of thing that might arise is what’s happening on the Turkish-Bulgarian border," the former leader of Ireland's centre-right Fine Gael party told me. “The situation would be more severe in Ireland, because the UK proposes to leave the customs union as well."

The outlook for Ireland looks grim – and a world away from the dynamism of the Celtic Tiger days Bruton’s coalition government helped usher in. “There will be all sorts of problems," he said. "Separate permits for truck drivers operating across two jurisdictions, people having to pay for the right to use foreign roads, and a whole range of other issues.” 

Last week, an anti-Brexit protest on the border in Killeen, County Louth, saw mock customs checks bring traffic to a near standstill. But, so far, the discussion around what the future looks like for the 260 border crossings has focused predominantly on its potential effects on Ulster’s fragile peace. Last week Bruton’s successor as Taoiseach, Bertie Ahern, warned “any sort of physical border” would be “bad for the peace process”. 

Bruton does not disagree, and is concerned by what the UK’s withdrawal from the European Convention on Human Rights might mean for the Good Friday Agreement. But he believes the preoccupation with the legacy of violence has distracted British policymakers from the potentially devastating economic impact of Brexit. “I don’t believe that any serious thought was given to the wider impact on the economy of the two islands as a whole," he said. 

The collapse in the pound has already hit Irish exporters, for whom British sales are worth £15bn. Businesses that work across the border could yet face the crippling expense of duplicating their operations after the UK leaves the customs union and single market. This, he says, will “radically disturb” Ireland’s agriculture and food-processing industries – 55 per cent of whose products are sold to the UK. A transitional deal will "anaesthetise" people to the real impact, he says, but when it comes, it will be a more seismic change than many in London are expecting. He even believes it would be “logical” for the UK to cover the Irish government’s costs as it builds new infrastructure and employs new customs officials to deal with the new reality.

Despite his past support for Britain, the government's push for a hard Brexit has clearly tested Bruton's patience. “We’re attempting to unravel more than 40 years of joint work, joint rule-making, to create the largest multinational market in the world," he said. It is not just Bruton who is frustrated. The British decision to "tear that up", he said, "is regarded, particularly by people in Ireland, as a profoundly unfriendly act towards neighbours".

Nor does he think Leave campaigners, among them the former Northern Ireland secretary Theresa Villiers, gave due attention to the issue during the campaign. “The assurances that were given were of the nature of: ‘Well, it’ll be alright on the night!’," he said. "As if the Brexit advocates were in a position to give any assurances on that point.” 

Indeed, some of the more blimpish elements of the British right believe Ireland, wedded to its low corporate tax rates and east-west trade, would sooner follow its neighbour out of the EU than endure the disruption. Recent polling shows they are likely mistaken: some 80 per cent of Irish voters say they would vote to remain in an EU referendum.

Irexit remains a fringe cause and Bruton believes, post-Brexit, Dublin will have no choice but to align itself more closely with the EU27. “The UK is walking away,” he said. “This shift has been imposed upon us by our neighbour. Ireland will have to do the best it can: any EU without Britain is a more difficult EU for Ireland.” 

May, he says, has exacerbated those difficulties. Her appointment of her ally James Brokenshire as secretary of state for Northern Ireland was interpreted as a sign she understood the role’s strategic importance. But Bruton doubts Ireland has figured much in her biggest decisions on Brexit: “I don’t think serious thought was given to this before her conference speech, which insisted on immigration controls and on no jurisdiction for the European Court of Justice. Those two decisions essentially removed the possibility for Ireland and Britain to work together as part of the EEA or customs union – and were not even necessitated by the referendum decision.”

There are several avenues for Britain if it wants to avert the “voluntary injury” it looks set to inflict to Ireland’s economy and its own. One, which Bruton concedes is unlikely, is staying in the single market. He dismisses as “fanciful” the suggestions that Northern Ireland alone could negotiate European Economic Area membership, while a poll on Irish reunification is "only marginally" more likely. 

The other is a variation on the Remoaners’ favourite - a second referendum should Britain look set to crash out on World Trade Organisation terms without a satisfactory deal. “I don’t think a second referendum is going to be accepted by anybody at this stage. It is going to take a number of years,” he said. “I would like to see the negotiation proceed and for the European Union to keep the option of UK membership on 2015 terms on the table. It would be the best available alternative to an agreed outcome.” 

As things stand, however, Bruton is unambiguous. Brexit means the Northern Irish border will change for the worse. “That’s just inherent in the decision the UK electorate was invited to take, and took – or rather, the UK government took in interpreting the referendum.”