Ed Balls at the Labour conference in Manchester last year. Photograph: Getty Images.
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We're only cutting spending to 1964 levels - Balls mocks the Tories' new defence

Shadow chancellor says the Conservatives have blundered by admitting day-to-day spending will be reduced to its lowest level for more than 50 years. 

The biggest of the Labour foxes that George Osborne sought to shoot in his Budget was the line that he's taking public spending "back to the 1930s". After last year's Autumn Statement exposed him to this attack (with the state forecast to shrink to just 35.2 per cent of GDP in 2019-20), the Chancellor announced that expenditure would now stand at 36 per cent: merely the lowest level since 1999-2000. As I noted earlier, this was before any of Labour's major spending increases to health, education and other areas, but it's a more comfortable comparison for the Chancellor than The Road To Wigan Pier

But at his usual post-Budget briefing for lobby journalists, Ed Balls (who I recently profiled) highlighted an OBR table which he said showed "spending on day-to-day public services by 2018 falls to its lowest share of GDP since 1938". Midway through Balls's take, the Tory Treasury Twitter account riposted that spending actually falls to its lowest level since 1964

Labour have since pointed out that the Tories have "clearly misread the OBR’s print. The OBR were referring to the 2019 level when making the claim on 1964." 

The relevant passage in the OBR document states

Relative to the size of the economy, nominal government consumption is forecast to fall from 19.7 per cent of GDP in 2014 to 16.1 per cent of GDP by 2019. This is less of a fall than we forecast in December, but would still leave government consumption as a share of GDP equal to its level in 1964 and would be the joint lowest level in consistent National Accounts data going back to 1948. On a quarterly basis, government consumption falls to 15.9 per cent of GDP at the end of 2018. This is marginally above its previous low of 15.8 per cent, again in 1964.

Alerted to the Tories' ripsote by a journalist, Balls immediately spotted a chance to open a new line of attack. "Is that a boast?" he asked incredulously. "What was the David Cameron thing about too many tweets make a .... too many tweets make a Treasury special adviser would be the way I would put it", he quipped, before clarifying (with his past job in mind): "A Tory Treasury special adviser". 

He concluded: "If I was George Osborne I would have said: 'Don't press send'". A Labour aide later told me: "If the Tories want a row about whether this is the lowest level of day-to-day spending on public services for 50 years or 80 years, it’s fine by us." 

And Balls has another new line to deploy: that there is (in the words of the OBR) "a sharp acceleration" in the pace of spending cuts after 2015-16.  As chart 1.3 of the OBR document makes clear, the planned fiscal tightening dwarfs anything seen in this parliament.

For Cameron and Osborne, who have sought to give the impression that most of the pain is over, it is an uncomfortable truth. Expect Balls to raise it repeatedly between now and election day. "I have to say, I thought George Osborne would try and find ways to change things and he's actually left it all the same," he told journalists. "It was extreme yesterday, it's extreme today and it will be extreme tomorrow."

P.S. Here are Labour's calculations, based on data from the House of Commons library, in full. As they show, spending in 2018 falls to 16.068 per cent of GDP, lower than the 16.073 per cent seen in 1964. 

George Eaton is political editor of the New Statesman.

Photo: Getty
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Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for International Trade.

Only Nixon, it is said, could have gone to China. Only a politician with the impeccable Commie-bashing credentials of the 37th President had the political capital necessary to strike a deal with the People’s Republic of China.

Theresa May’s great hope is that only Liam Fox, the newly-installed Secretary of State for International Trade, has the Euro-bashing credentials to break the news to the Brexiteers that a deal between a post-Leave United Kingdom and China might be somewhat harder to negotiate than Vote Leave suggested.

The biggest item on the agenda: striking a deal that allows Britain to stay in the single market. Elsewhere, Fox should use his political capital with the Conservative right to wait longer to sign deals than a Remainer would have to, to avoid the United Kingdom being caught in a series of bad deals. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.