FreeThink Comment Blog
The maths is simple. The answers are misleading, evasive and wrong PDF Print E-mail
Written by Giles Wilkes   
Thursday, 18 June 2009 19:52

Not many people have kind words to say for Gordon Brown.   Browsing the comments below opinion pieces, you quickly lose count of the furious trolls*  who call him a 'traitor', accusing him of 'destroying' the country (obsessing on his selling the gold is a common theme), or throwing abuse more vile and personal than that.  But we at CentreForum have always tried to be fair - for example, by criticising Polly Toynbee's account of how inequality has been changed by his policies, or reminding people of how public services have improved in the last dozen years. 

But his conduct in this row about what future public spending plans mean would test his the most loyal fan. The performance during PMQ's on Wednesday had us literally going back to check the tapes, so blatant was the evasion, misdirection and actual mendacity.  Moreover, it was politically dumb, hoping that the old dog-whistle of public spending cuts can excite the electorate and scare Tories like it's 1999.  

For a policy wonk, the worst feature was the use of the real-nominal distinction to disguise a fall in actual spending.   Brown must have used this time and again in the 1990s, when he attacked a Conservative administration that prioritised debt over public services.  Incidentally, as well as making Labour more popular, this policy helped bequeath Brown a wonderfully strong fiscal position.  But it takes no more than a pencil and paper to work out the blindlingly obvious truth: that spending on non NHS services CANNOT rise if Darling's figures (ta ble C4) are what actually occurs. 

From 2011 to 2014 current expenditure rises from £645bn to £712bn.

Debt interest costs will have risen from about £42bn to £60bn.

IF social security + tax credits grow at the rate of wage inflation (4%), then £192bn will rise to about £216bn.  This way too optimistic - unemployment lags in a recession, and pensioners demand much higher rises. In cash terms the amount left over for ALL services will rise from £411bn to £436bn.    That £25bn increase is NOT enough to wipe away three years of inflation.  Once you allow the £100bn NHS budget to rise by 4% in nominal terms, the cuts elsewhere are even greater.  And we have not discussed wage inflation, rising pension costs, all of which make the maths much much harder.

Brown tried to change the subject by actually using the word 'investment' for what it really means for once - capital spending.  But his claims about capital expenditure were even more straightforwardly incorrect. 

His spokesman tried to 'clarify' with these words.

“The prime minister said what he said."   A tautology.

"The figures are set out in the red book".  Yes, they are

"It’s clear that expenditure in relation to the Olympics increases in the run up to the Olympics".  Which is not what Brown said.  He said "“capital expenditure will grow until the year of the Olympics.  Let's look at the red book. 

                          07/8 08/9  9/10 10/11 11/12 12/13 13/14

Gross investment   47.1  56.2   63    57      51     49      46
Less depreciation  -17.8 -18.6  -20   -21     -22    -23     -24
Net investment     29.3  37.7   44    36      29     26      22

On no measure is this true. Capital spending is falling, whether or not on volleyball courts.

This is shameful: at the very moment when clarity and honesty are required about our future public spending plans, so a decent strategic approach can inform the choices before the electorate within a year, the man who should understand the figures the best is using the Dispatch box to muddy the debate.  Even the IFS is now using colourful language.  Our piece about the Fiscal Rules thought that this innovation of Brown's just served to obfuscate and diminish accountability.  The habit has not died yet.

UPDATE:  Since writing this piece I have read two influential columns that seem to make roughly the same point. Martin Wolf writes

But at the heart of the next general election will be hard choices, for whoever wins. A democracy should debate those alternatives openly and honestly.Unless the economy recovers its lost output, the fiscal position will demand tough spending cuts or huge increases in taxation. Indeed, it will probably require some of both. Mr Darling has recognised that simple reality. So have the Conservatives. But does Mr Brown? 

 Bagehot:

So they (Labour) perform absurd statistical gymnastics to avoid admitting the squeeze that is inevitable. And Mr Brown bellows time-warped incantations about “how many doctors, how many teachers” the Tories would massacre.

*So often they are ex-pats, whose fury about the Motherland is entirely fuelled by the misleading rants of rightwing miserabilists.

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