Com­ment It’s worse than you think – we never had aus­ter­ity

Birmingham Post - - NEWS -

AUS­TER­ITY has be­come a dirty word. Jeremy Cor­byn’s Labour Party says aus­ter­ity must end. Some Con­ser­va­tive MPs think Labour’s sur­prise suc­cess in June’s gen­eral elec­tion shows that vot­ers agree.

But there’s one prob­lem for politi­cians con­tem­plat­ing a new ap­proach... we’ve never had aus­ter­ity in this coun­try.

Some ser­vices, such as polic­ing and local gov­ern­ment, have been forced to cope with huge cuts in their bud­gets.

And mil­lions of public sec­tor work­ers have suf­fered ma­jor pay cuts, in real terms.

So the idea that we haven’t ex­pe­ri­enced aus­ter­ity may sound like a joke to them.

But if aus­ter­ity means that over­all spend­ing on ser­vices has fallen, then it hasn’t hap­pened here.

What’s hap­pened in­stead might ac­tu­ally be worse, be­cause it’s much harder to deal with.

Public ser­vices such as schools and the NHS – far and away the big­gest sin­gle item of ex­pen­di­ture, other than the wel­fare bill – have seen their fund­ing rise in real terms.

But while en­joy­ing a fund­ing in­crease, they find it harder to make ends meet.

And this means that you can’t end the cash short­age in schools and hos­pi­tals sim­ply by say­ing you’ll stop mak­ing cuts, or even by promis­ing to re­verse the cuts al­ready made – be­cause they haven’t had cuts.

In­stead, they may need a mas­sive cash in­crease, on top of the in­creases they’ve al­ready got.

Trea­sury fig­ures show that spend­ing has in­creased. Ex­pen­di­ture was £584.2 bil­lion in 2011-12 but rose to £646.5 bil­lion in 2016-17.

What hap­pens when you take in­fla­tion into ac­count? The Trea­sury does this by ad­just­ing the num­bers for ev­ery year to 2015-16 price lev­els,

And it finds that fund­ing in­creased from £616.2 bil­lion in 2011-12 (at 2015-16 price prices) to £636.5 bil­lion in 2016-17.

A small part of that in­crease is down to a rise in the wel­fare bill (all the fig­ures from this point on are ad­justed to re­move the ef­fect of in­fla­tion).

The bud­get of the Department for Work and Pen­sions, which ad­min­is­ters wel­fare, rose from £175.9 bil­lion in 2011-12 to £177.2 bil­lion in 2016-17.

So it went up. But there was a big­ger in­crease in the health bud­get, from £125.5 bil­lion to £140.1 bil­lion.

Education spend­ing rose slightly from £65.4 bil­lion to £67.8 bil­lion.

Of course, some ser­vices have been tar­geted for cuts. The bud­get for the Home Of­fice, which in­cludes polic­ing, has fallen.

But even in 2011-12, the Home Of­fice bud­get was just £14.3 bil­lion, much lower than health or education spend­ing.

It doesn’t mean the cuts don’t mat­ter, and it ar­guably sug­gests they were point­less be­cause they couldn’t pos­si­bly make a big dif­fer­ence to over­all spend­ing. But it ex­plains why to­tal gov­ern­ment spend­ing has in­creased even though ser­vices such as polic­ing have suf­fered huge cuts.

If fund­ing for many ser­vices has risen then what’s the prob­lem?

The National Au­dit Of­fice, the of­fi­cial in­de­pen­dent spend­ing watch­dog, pub­lished a re­port in Novem­ber 2016 which con­firmed NHS fund­ing had risen – but warned that the amount ac­tu­ally spent by health trusts such as hos­pi­tals had risen by even more.

This is why NHS Trusts, in­clud­ing semi-in­de­pen­dent Foun­da­tion Trusts, went £2.45 bil­lion in the 2015-16 fi­nan­cial year.

De­mands on the NHS are grow­ing faster than the bud­get is ris­ing. We live longer than we used to, and old peo­ple need more health­care. The pop­u­la­tion is in­creas­ing. And med­i­cal tech­nol­ogy gets bet­ter – so the NHS now treats con­di­tions which it couldn’t in the past.

And it’s a sim­i­lar sit­u­a­tion in our schools. An­other National Au­dit Of­fice re­port, in Fe­bru­ary 2017, warned schools would need to cut spend­ing by £3 bil­lion to bal­ance the books.

But it’s not be­cause their fund­ing

If aus­ter­ity means that over­all spend­ing on ser­vices has fallen, then it hasn’t hap­pened here

has been cut. It’s partly be­cause the num­ber of pupils in schools is in­creas­ing and partly be­cause they face a se­ries of cost in­creases that they just can’t con­trol.

These in­clude an in­crease in National In­surance con­tri­bu­tions, in­creases in the cost of the teach­ers’ pen­sion scheme and the need to in­crease pay for some staff be­cause of the Gov­ern­ment’s National Liv­ing Wage pol­icy, which in­creases the min­i­mum wage for many low-paid staff.

Even with fund­ing in­creases, our health and education ser­vices can’t cope.

This doesn’t mean we should give up on a so­lu­tion. It means the an­swers are more dif­fi­cult than “end­ing aus­ter­ity”.

And it may mean politi­cians of all stripes have to be more hon­est with vot­ers about the need ei­ther to ac­cept a lower stan­dard of ser­vices or to pay sig­nif­i­cantly more tax.

> Jeremy Cor­byn at an anti-aus­ter­ity march on Par­lia­ment last week

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