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"Whoever wins the election, Labour or Conservative, is going to have to cut spending. That is not something that Margaret Thatcher actually did. So tougher than Margaret Thatcher." So said George Osborne on the Today Programme this morning - and the numbers by and large bear him out.
Total public spending increased by an average of 1.1% a year in real terms over the Thatcher era. This is almost three times the increase of 0.4% a year that Alistair Darling pencilled into his Pre-Budget Report last November for the forthcoming Parliament. If the Conservatives wish to achieve a bigger fiscal tightening than Labour - and/or if they wish to achieve more of it through spending cuts rather than tax increases - then the gap would be even bigger.
While the PBR figures do show spending continuing to rise in real terms over the coming Parliament, if we subtract spending on welfare and debt interest then we estimate that the rest of public spending would be cut in real terms by an average of 1.4% a year compared to an average increase of 0.7% in the Thatcher era. We have not seen five years with an average annual real cut as big as this since the mid-1970s. The PBR figures also suggest that we will see real cuts not just on average over the Parliament but in every year of it - and we have not seen cuts for four or five years running since before the war.
Even this comparison flatters the likely outlook for public services, as it includes some spending on other areas (such as public sector pension bills) that are likely to continue rising in real terms. We estimate that if you look solely at what the Treasury calls "Department Expenditure Limits" - Whitehall spending on public services and administration - then the likely real cut implied by the PBR projections would be 2.4% a year over the Parliament.
Alas we don't have official estimates of what DELs would have been in the pre-Labour years. But the comparison would be pretty sobering. And if the Conservatives want to cut further and faster, all the more so.
View all Observations in the series
A give and take Autumn Statement?
The Autumn Statement is expected to contain a welcome upward revision to the forecast for economic growth this year and a welcome downward revision to the headline deficit. But any improvement will be small relative to the level of the deficit forecast in the Budget, and the deficit this year will still be very high by historical standards and relative to what was projected at the start of this Parliament and compared to what the Chancellor is ultimately hoping to achieve. So as the Chancellor George Osborne prepares for the Autumn Statement, if he is planning to make good on the promises of giveaways made during the party conference season he should also be considering new measures to pay for them.
Entry to grammar schools in England for disadvantaged children
New work by IFS researchers, funded by the Sutton Trust, suggests that grammar schools are disproportionately unlikely to admit students who are eligible for free school meals, even when conditioning on their academic performance in primary school. They are by contrast disproportionately likely to admit children who have attended private schools before age 11.
The crucial role of good evidence in evidence-based policymaking
In a time of continuing fiscal austerity, policymakers increasingly want to know ‘what works’ and for whom, in order to target scarce resources on those who will benefit most and to ensure that policy has the desired impact upon those it is designed for. Basing policy decisions on evidence is undoubtedly a good thing - but only if the evidence used is robust, unbiased and methodologically sound. This observation uses recent IFS work on the link between parents’ marital status and relationship stability and child development to illustrate the challenges of using research to inform policymaking.