Public spending
Carl Emmerson
11–12
10–11
09–10
08–09
07–08
06–07
05–06
04–05
03–04
02–03
01–02
00–01
99–00
98–99
8
7
6
5
4
3
2
1
0
-1
-2
97–98
96–97
Percentage real increase
Real increase (LH axis)
Level (RH axis)
50
48
46
44
42
40
38
36
34
32
30
Percentage of national
income
Total Managed Expenditure
Financial year
Source: HM Treasury
Growth in spending components
Average annual real growth
18.0
15.5
16.0
14.0
12.0
CSR 2007
Labour to date
10.0
8.0
6.0
4.0
2.0
3.3
1.9
2.7
1.9
2.9
0.0
TME
Capital
Current
Source: HM Treasury
What increases might we have?
Total Managed Expenditure
1.9
TME - margin
1.8
Of which:
Home office
-5.0
0.0
9 small departments
Department for Constitutional Affairs
-3.5
Official Development Assistance
10.9
Social security & tax credits
Non NHS, non-education
2.0
0.0
NHS
4.4
Education
-6
-5
-4
-3
-2
-1
2.0
0
1
2
3
4
5
6
7
8
9
10 11
Percentage real increase
Source: HM Treasury ; IFS
What increases might we have?
Total Managed Expenditure
1.9
TME - margin
1.8
Of which:
Home office
-5.0
0.0
9 small departments
Department for Constitutional Affairs
-3.5
Official Development Assistance
10.9
Social security & tax credits
Non NHS, non-education
2.0
0.0
NHS
3.1
Education
-6
-5
-4
-3
-2
-1
3.8
0
1
2
3
4
5
6
7
8
9
10 11
Percentage real increase
Source: HM Treasury ; IFS
A ‘firm and fixed’ CSR?
Average annual real growth
7.0
6.0
Original CSR 1998 plans
Adjusted for lower inflation
Latest outturn
5.6
6.2
5.7
5.1
5.0
4.5
4.0
3.0
6.6
3.3 3.5
3.8
3.9
3.3
2.8
2.7
2.2
2.0
0.9
1.0
0.0
Total
Managed
Expenditure
Departmental
Expenditure
Limits
NHS
Education
Annually
Managed
Expenditure
Average increases from April 1999 to March 2002
Source: HM Treasury; Department of Health; IFS
A post election tightening
• Tax measures announced since the last
election to raise £6bn in 2007–08
• Over the next 5 years
• tax burden set to rise by £9bn, of which
£4bn discretionary measures since the
election
• spending cuts worth £9bn now pencilled in
• total planned tightening £18bn, of which
£15bn is from discretionary post election
announcements
Conclusions
• Golden rule should be met over the Treasury’s
current economic cycle estimate
• Over the next few years
• borrowing similar to Budget, but underlying
deterioration
• still little room to manoeuvre, despite further tax
increases and planned spending cut announced
since last election
• Spending plans could prove incompatible with
aspirations
• plans could be subsequently topped up, but would
require additional finance