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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.
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Cutting the deficit: three years down, five to go?
The UK is in the fourth year of a planned eight-year fiscal tightening. Following further announcements made in Budget 2013, this fiscal consolidation is now forecast to total £143 billion by 2017–18. The UK is intending the fourth largest fiscal consolidation among the 29 advanced economies for which comparable data are available. By the end of this financial year, half of the total consolidation is expected to have been implemented. However, within this tax increases and cuts to investment spending have been relatively front-loaded, while cuts to welfare spending and other non-investment spending have been relatively back-loaded.
The March Budget forecast that borrowing would fall by £0.1 billion from £121.0 billion in 2011–12 to £120.9 billion in 2012–13. On Tuesday, the Office for National Statistics is due to release its first estimate of public sector net borrowing in March 2013 and, therefore, for the whole of 2012–13. Borrowing could easily end up being higher or lower than it was in the previous year, either due to backwards revisions, the uncertainty inherent in forecasting borrowing even a month in advance, or both. However, whether borrowing is slightly up or down in cash terms is economically irrelevant. Either way, the bigger picture is that having fallen by roughly a quarter between 2009–10 and 2011–12, borrowing is forecast to be broadly constant through to 2013–14.
Women working in their sixties: why have employment rates been rising?
Employment rates through the recession have been remarkably robust, with today’s ONS figures showing employment remaining close to 30 million. The young have experienced historically low employment rates and high unemployment rates but the employment rate of women aged 60 to 64 has increased as fast since 2010 as it did during the 2000s. An important explanation is the gradual increase in the state pension age for women since 2010, which has led to more older women being in paid work. Without this policy change, the employment rate for 60 to 64 year women would have been broadly flat since 2010.