From the TUC

Government investment still way down on the last parliament #SpendingReview

25 Nov 2015, by in Cuts Watch

Some rabbits came from the hat today. New spending announcements, departmental cuts allegedly eased (others are looking at the potential horrors of the local authority position), and the tax credit U-turn. One area of some emphasis was investment spending, not least on housing. The devil as always is in the detail.

Any spending increase in this area is welcome of course, but the overall position remains of ongoing reductions in government investment.

Public sector net investment, %GDP

csr_nov_15_3

On the basis of the spending review figures, investment is up on the plan set out in the summer budget (mainly reflecting the house building programme). But it remains way down on the 3.2% GDP they inherited. The projected spend in the whole of the current parliament will average at 1.6%, when the average over the last parliament was 2.0%, nearly a 20 per cent reduction.

This is not “building”, it is dismantling.

Note also, of the surge in 2020-21 (which I have generously included in the average, though is still below the average of the last parliament), the OBR say:

The leap in 2020-21 is sufficient to ensure that total public spending in that year remains above its late 1990s lows as a share of GDP;

 

This is standard trickery, showing the reality is the politics not the economics.

2 Responses to Government investment still way down on the last parliament #SpendingReview

  1. The Spending Review arithmetic made simple
    Nov 25th 2015, 5:27 pm

    […] Moreover within the aggregate spending limits there are horrendous cuts to local government spend, as the government passes the buck for cuts to local authorities (see here). As discussed elsewhere, boasts about infrastructure spending are pretty hollow (here). […]

  2. Andy Haldane at the TUC: technology, labour and policy choices
    Dec 23rd 2015, 3:02 pm

    […] In the Q&A following the speeches, it was most encouraging to hear Andy remark that Frances had made a “perfectly compelling and cogent argument for infrastructure spending”. He re-enforced the point by informing the audience that he now knew (government) interest rates were at their lowest point since at least Babylonian times, i.e. for 5000 years (see chart at head of blog – extracted from a Haldane speech ‘Stuck’ on 30 June 2015). While the recent Autumn Statement provided a welcome rhetorical commitment to new investment, and set out a series of increases over the course of the parliament, the fact remains that spending over the next five years is still set to be lower as a share of GDP than in the last parliament – and that was no high bar (here). […]