Wednesday, 9 June 2010

Will the government really cut public spending?

There has been a lot of discussion recently about the cuts in public spending that the government will, apparently, have to implement, in order to deal with the budget deficit.

I'm wondering if it is really going to happen. You see, I am old enough to remember the last time time that the government were making savage cuts. It was back in the early years of Mrs. Thatcher's administration. I remember the loud protests and the cries of pain. But Mrs. Thatcher was made of stern stuff, and was not about to be deflected.

Except that she never actually managed to cut public spending. Oh, some savings were made, but overall public spending just went on rising. Don't believe me?

Here's the graph to prove it - taken from UK Public Spending.

And if you want to see it adjusted for inflation, the blue line on graph below (courtesy of the Institute for Fiscal Studies) represents Total Managed Expenditure (TME) in real terms from 1948 to the present. (TME comprises expenditure by the entire public sector – namely, the central government, local authorities and public corporations.)

OK, the Conservatives did cut public expenditure in real terms in 1985/86 and 1988/89 - but it took them several years to do it, and even after these cuts, it was higher in real terms than it was when Mrs. Thatcher came to power in 1979.

If Mrs. Thatcher's administration didn't cut spending, do you really believe that a government led by Mr. Cameron and Mr. Clegg will?

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