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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
Death to the death tax?
Last week the Prime Minister, David Cameron, stated that he would like to increase the inheritance tax threshold, reviving memories of the 2010 Conservative Party manifesto pledge to increase the threshold to £1 million. This observation sets out how much this would cost, who would benefit and sets out arguments for alternative reforms to inheritance tax.
No new money, yet more generous support for childcare
The Government has today announced more details on its new Tax Free Childcare scheme and the way in which childcare will be supported in Universal Credit. The announcement means that the planned system will be significantly more generous than initially envisaged, providing support to children aged up to 12 straight away, will provide a higher level of support, and will provide more generous support for childcare in Universal Credit. Yet the Treasury has not increased its estimate of the total cost, as it has revised down considerably its estimate of how many families will benefit.
Scotland's fiscal position worsened in 2012–13 as North Sea revenues fell
Today, the Scottish Government published the latest version of its annual Government Expenditure and Revenues Scotland (GERS) publication. For the first time in 5 years GERS suggests that Scotland's net fiscal balance, or budget deficit, was worse than that of the UK as a whole even when allocating North Sea revenues to Scotland on an illustrative geographic basis. Until now these revenues have been enough to more than outweigh the higher public spending per head in Scotland than in the rest of the UK. But not in 2012–13.