"In fact what is striking is that the metanarrative that pervades every page of the Speccy cannot really be embraced by the Conservative front bench: chief whip Patrick McLoughlin has been enforcing the line that the Tories "don't want to do these cuts". " So says the BBC's Paul Mason. Blogging taxpert Richard "Not Murphy" J says:
the surprising thing about it all is how vague and tentative most of it is - there's a lot of promises to cut things in 2012/13, but surprisingly little up-front pain
But the thing that surprised me about the CSR was just what a propagandistic document it is. The next time I see a Tory complaining about "politicising the civil service", I'm going to laugh in their face. Take this, from page 13:
1.2 In the 20 years to 2006-07 and the beginning of the financial crisis, public spending averaged around 40 per cent of GDP. It then increased to a historically high level of 48 per cent by 2009-10. Receipts by contrast did not exceed 40 per cent over the whole period, and fell to 37 per cent in 2009-10. As a result of this imbalance between levels of spending and tax receipts, the Coalition Government inherited one of the most challenging fiscal positions in the world.
Public spending averaged around 40 per cent of GDP...and receipts did not exceed 40 per cent...up to the beginning of the financial crisis. Public spending then "increased to a historically high level of 48 per cent..." between 2007 and 2009. While receipts "fell...to 37% in 2009-2010." To put it another way, there was a hell of a recession. Strangely, however, the CSR drafters try very hard to deny that there might have been any connection between the "financial crisis" and the increase in the budget deficit. We might take a moment to review the following chart from way back when: They also say:
Chart 1.1 illustrates that from 2001 onwards public spending grew steadily as a share of the economy and a structural budget deficit began to emerge. Government measures to tackle this structural deficit did not begin to take effect until 2010, by which time the impact of the financial crisis had made an unaffordable situation unsustainable.
However the chart itself clearly shows that the "structural deficit" as a percentage of GDP was basically constant through this period, and that the total deficit for the peak year 2009-2010 is overwhelmingly attributable to the recession. For some reason, the Y axis is marked as "per cent of GDP" but doesn't have any numbers on it, so as to make it harder to read. This on a document issued on the eve of World Statistics Day. Note 7 says that:
The Spending Review Framework, published on 8 June 2010, set out that within AME, social security, tax credits and public service pensions were included within the Spending Review, while central government debt interest, BBC domestic services, National Lottery and net expenditure transfers to EU institutions were excluded, as they are either self financing or not directly within Government control.
However, this doesn't stop the CSR drafters from including bits of this every time they want to make a point...
1.11 Of the £81 billion of savings required by 2014-15, over £30 billion were announced in detail at the June Budget, including: •• £11 billion of welfare reform savings; •• £3.3 billion from a two year freeze in public sector pay starting in 2011-12; •• £6 billion of efficiency savings in 2010-11;6 and •• £10 billion from lower debt interest payments compared to the cost had there been no consolidation.
No consolidation at all? Of course, the March 2010 budget foresaw a substantial consolidation. Taking credit for Alistair Darling's budget is something of a theme. Also, debt interest is back in Chart 1.3, although it's out of scope (and is anyway about 6 per cent of the general government budget). Then there's this:
1.23 Over the last decade, the UK’s economy became unbalanced, and relied on unsustainable public spending and rising levels of public debt. For economic growth to be sustainable in the medium term, it must be based on a broad-based economy supporting private sector jobs, exports, investment and enterprise.
The only thing unbalanced in the UK economy in the 2000s was the government budget? Really? Incredibly, there is no mention at all in the CSR's macroeconomic analysis that there was an enormous property bubble, or that there was an enormous run-up of private sector wholesale debt. In fact, the word "recession" appears precisely once in the 106 page PDF, in reference to public sector staff salaries. "Crisis" appears twice. However, the drafters of the CSR did find it in themselves to organise the entire departmental section of the document into "Fairness" and "Reform" headings. They also said that:
"a number of older or non essential capabilities such as Harrier jets, Nimrod MRA4 maritime patrol aircraft and some frigates are being reduced or withdrawn."
The first MRA4 was delivered to the RAF in March, 2010. Older, clearly. They also work through the book of drafter's trickery - each section starts with bold green bullets detailing the sops handed out to that department. Skimming, you might think it was mostly Lady Bountiful. We even get to learn that there is a £150 million national scholarship fund - a mammoth 0.0215% of the national budget. Oh yes, and all savings in the document are relative to the peak year 2009 - so they look bigger. Which makes me wonder - perhaps we've had the OBR the wrong way up? We always rather suspected that the point of the OBR was to provide a flexible friend that would come out with Big Scary Numbers to justify the cuts agenda. We were vindicated on the flexible bit; but in that case, as Whitehall Watch points out, they're looking a bit scarce right now. Perhaps the real role of the OBR wasn't so much to guard against past politicisation, but to provide for future politicisation - to have at least some valid forecasts, because the Treasury was going to be used as a pure partisan propaganda pump? (Our guess on where the OBR's view is, by the way, is that Robert Chote's still trying to squeeze into his office in Osborne's drinks cabinet.) The bottom line is that this is one of the most slimy and mealymouthed official documents I've had the pleasure to read. It's an economic dodgy dossier.