Why we can't end austerity

The BBC assistant political editor Norman Smith commented that it was remarkable for the Tories to win the Copeland by-election last week after "seven years of austerity". Well, that would be because there hasn't been seven years of austerity, it would actually be because Labour is in disarray. The rotten sneaky Tories (and their LibDem fellow travellers in the last Parliament) have actually increased public spending by 9%.

To be fair, that is in cash terms. The Institute for Fiscal Studies says Total Managed Expenditure (the official term for public spending) has been "relatively flat in real terms" (i.e. adjusted for inflation) since 2010. You can see the graph for yourself by following the link below, but the actual numbers are (in 2015-16 money) that spending peaked at £765.4bn in 2010-11 and fell back to £740.4bn in 2013-14 before turning back up slightly. I make that a real terms reduction of 3%, a hardly swingeing 1% a year. And it came after Blair and Brown increased real terms spending from £502bn in 1999-2000 to £763.2bn in 2009-10, an astounding (and horrifying) 52% in 10 years, averaging 5% a year. This is the real source of our public funding crisis, not the pantomime villain banks. Because the money was not just spent but spent badly, pumping up salaries without efficiency improvements, for example the notorious GP contracts, a classic case of less (service) is more (cost).

Now I know that there are areas of the public sector which have experienced severe funding cuts because of this stagnation of spending growth, but I feel the dialogue surrounding "cuts" is fundamentally dishonest.

The BBC, of course, is the arch-champion of the savage/unscrupulous/heartless cuts brigade. They never put the context of the conflicting pressures or the still parlous state of our public finances. And they never, ever, make it clear that the ever increasing debt burden (for it is the deficit that has come down, not the debt total, which continues to grow alarmingly year on year) basically means we are living off our children and their children, who will have to settle the bill.

We heard a lot from the Remain camp about the supposed evil of older voters tilting the scales to Brexit, condemning the younger generations to penury. Well Brexit might turn out that way but probably won't - the chances are it will be a 2nd order effect on the economy in the long term. But unsustainable spending now, leaving a mountain of debt definitely makes future generations poorer. For some reason, this argument is rarely heard. Much easier to kick the can down the road and leave some other poor bugger to pick it up. But just as unpraiseworthy as leaving future generations with a despoiled environment.

As I said, I'm not arguing that there haven't been cuts, some of them painful. And demand has gone up: there are more old people (indeed more people) so there are pressures on social care and the NHS. Local councils have faced years of budget reductions, to the point where basic amenities (e.g. public toilets, parks and gardens) have become unaffordable with the inescapable legal responsibilities councils have to provide many services. But given spend hasn't gone down materially this is fundamentally an issue of allocation and priorities.

So, how should it all be paid for? On planet BBC/hand-wringing Guardianista left wing, no cuts to services are ever acceptable, so total spend would always increase. (I know they point to a few things which they would stop but their appetite for spending is always bigger than the savings).

They say that continuing to increase debt to fund services and investment is sustainable and affordable as long as the markets will lend. And interest rates are low. (For now). But debt interest is the 5th biggest call on public funds in 2017, after pensions, health, welfare and education. At 6% of total spend it is equal to our spend on defence and a third of the health budget.

And every extra pound of future interest payments committed by current borrowing is a pound that won't be available to spend on future services.

By the way, if you want to know what austerity really looks like, in Greece public spending has been cut by 30% since 2010.

So can we please stop pretending that something similar has happened to us? Oh for a grown up and realistic debate about requirements, our ability to pay for them and priorities. In the meantime, I'll consider everything else to be special pleading.

Anyway, since total public spending year on  year has barely gone down - the IFS graphs show very clearly we've had a small squeeze in overall spending terms - we can't end austerity because officially it never happened.

https://www.ifs.org.uk/tools_and_resources/fiscal_facts/public_spending_survey/total_public_spending