Balancing the budget


money1Apparently the Tories are going to cut public spending by 10%. But are they really? Assuming a May 2010 election, and a bit of time to get organised, that should mean cutting Darling’s proposed spending for 2011/12 from £717 billion to £645 billion.

Except that they aren’t going to cut education, or health, or overseas aid. And they can’t cut debt interest or payments to the EU. And they are only proposing to cut departmental expenditure, not benefits, pensions or tax credits. So in fact the Tories’ supposed 10% cut is actually barely 3%, from £717 billion to £695 billion.

That leaves the Tories’ spending more than Labour’s record £671 billion this year. Even allowing for inflation, the Tories propose to spend more than Labour ever spent. You call that a cut? Pathetic.

So what can be done to balance the Budget?

The Treasury estimates that taxes will bring in £577 billion in 2011/12, but frankly no-one else does. Lets assume that we’re not going to get any more than 2008/9’s £530 billion. So what would we have to do to balance the Budget at that level, instead of Darling’s insane plan to borrow £111 billion?

Well, four years ago (2005/6), government spending was £523 billion. Take spending back to that level, and we would have a surplus. Remind me, who was the Chancellor who thought that £523 billion was a generous level of public spending just four years ago?

OK, those calculations don’t allow for inflation. So let’s go all the way back to 2002/3 – five years into the Labour government. Then the government’s total spending was £425 billion. Add on inflation, and that would cost about £515 billion by 2011/12, leaving a £15 billion surplus.

So balancing the Budget, without any tax increases, means the government just has to do what it did in 2003. Is that really so difficult?