23 April 2009

The hidden details of the Budget start to emerge

Fraser Nelson has unearthed the details of the investment cuts that are hidden away in the Budget:

The slowdown in spending growth from 1.1% to 0.7% was only current spending, which masked a 17% cut in what the Treasury categorises as “investment” spending (ie, roadbuilding  etc). Put the two together, and total spending is being cut (yes, cut) by 0.1% in real terms from 2011-12 to 2013/14. Now, debt interest payments will be up 8.4% in that timeframe – so other budgets will have to fall by 0.6%. Except social security bills can’t fall, so on cautious estimates Tetlow reckons there will be an average 2.3% cut (yes, cut) a year across other government departments each year over this three-year period likely to be covered by the 2010 Spending Review.

Note that these cuts to the investment programme do not kick in until next year.

He goes on to rightly point out:

This is a crucial departure. Labour can no longer go on about “Tory cuts” – they are cutting, and significantly – but still nowhere near enough to balance the books.

Perhaps this goes someway to answer Dizzy’s perceptive post about the recession.

This side of the election we are being lured into a false sense of security that all will be well in a year of so.  The next few years are going to be very painful indeed, especially for those firms and employees dependent on pubic sector capital works programmes.

Austerity UK will be us for some years.

UPDATE: It is worth taking a look at Stephanie Flanders take on this.

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  1. I'm never normally a stickler for typos, but in the last black line you may have mis-spelt "public" as "pubic". Again, I don't normally point them out, but this one was slightly more amusing than most!

  2. Dan, Thanks for pointing that out. I can only do what Brown doesn't and say sorry.

  3. Damn I missed that - oh you've left it in GV. Well done you.