Thursday, October 21, 2010

Give and take

Richard North has highlighted something that seems to have been missed in the whole Spending Review, that is what is being cut is not spending, but the unreal expectations created by the profligate promises of the previous Government. As he points out,
There are no cuts. I say again, there are no cuts. What the Cleggerons are talking about is a reduction in the rate of increase in public expenditure as compared with the June budget. This is helpfully summarised here and the source is here.

You will see that the current financial year expenditure is £696.8 billion. By 2014-15, the projected expenditure was to rise to £757.5 billion. Little George is now proposing that this increase is limited £739.8 billion. This now becomes a 17.7 percent "cut", albeit that expenditure is still increasing.

Thus, the language of public expenditure has been redefined. A reduction in the rate of increase is deemed to be a "cut". In fact, by 2014-15, annual expenditure will have increased by £43 billion, up 6.2 percent (not nine, as originally stated). By such sophistry, "cuts" are not actual reductions. They are lower than projected rates of increase.
What he has missed is that the round tatal figure being bandied about by the Treasury over 5 years is £81 billion. A big figure for reducing expectations, but one that has an interesting mirror.

Nigel Farage has just pointed this out,
"Currently Britain is paying £45 million to Brussels as subscriptions to the EU club", he said, "multiply that by 365, then again by 5 and the figure is £82 billion".

"If we were to leave and if we were to continue to reduce spending expectations then we as a nation could clear our deficit in double quick time. This would of course create significant private sector confidence and cause a massive boost to investments and jobs".

Instead of that this Government continues to beggar us by membership of the sclerotic spendthrift European Union, rather than giving this country the freedom to grow."

Of course I have not included the 5.9% increase in EU funding so immorally voted for yesterday in Strasbourg, nor indeed the loss of our rebate, so in reality the figures may become even more stark",
These figures are rough and ball park, true, but they do point to a very serious blind spot at the heart of Treasury thnking. What we sime to have is the Treasury taking money from the taxpayer, whislt giving it it straight to Brussels.

(NB. Some money of course does come back, but only where and how other people want to spend it)

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