Budget semanticsFor a UK Government in power but nearing the end of its allotted tenure and wanting to win a fourth period at the ballot box in May 2010 (there is of course an alternative course and that is to retire and let the young pretenders have a go), the obvious way to walk a tightrope is to broaden the rope surface with a material called efficiency.
The dichotomy is well known. Get income a bit closer to costs by cutting the public servant pay bill yet risk reducing front-line public services and national strikes. The answer is increased productivity by the public sector or expressed another way, more “efficiency.”
The Chancellor in his statement to the House yesterday highlighted £11bn of efficiencies from Government departments and the largest slug of which is from Health and the NHS (£4.35bn or just under 40% of the whole). The semantics arise thus:-
• Overall Government spending will increase by 2.2% in the 10/11 fiscal year. According to my calculation this amounts to just under £15.5bn.
• A £11bn “cut” is therefore a £4.5bn increase.
• The £11bn is both futuristic and impossible to check without detailed implementation actions that are auditable.
The Treasury’s calculations for reducing the overall UK deficit by half by 2014 rest on a GDP growth projection of 3.25% plus from 2011. Independent sources average about 2.5%. The margin of error implied is significant because the ratio of national debt to GDP would reach 100% by 2018 if the independent bodies (that include the IMF) are correct.
Perhaps a stretch from an £11bn cut to a 100% debt is stretching the word semantic just a bit.
jgs- March 2010
