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Despite Cuts Government Spending Increases

Andy Fletcher | 14.10.2012 21:27 | Analysis | Public sector cuts

The government’s austerity measures were described by the Financial Times as “the most drastic cuts in living memory...” The chancellor’s 2011 budget admits that estimates suggest the UK to be the most indebted nation on the planet. Four years on from the financial crisis not much has changed. Spending hasn’t decreased, it has increased.

The word ‘austerity’ hadn’t hit the public consciousness before 2008. With 2008 came the biggest financial collapse since the Great Depression and with that came the return of the word ‘austerity’. The word has been used to describe public spending cuts across Europe, from Spain to Greece, Italy to Ireland. The logic is simple, you’ve been living the high life on a credit card and if you don’t want to go bankrupt then you better start cutting down on the weekly shopping bill. But the shopping bill hasn’t gone down.

In 2008 spending sat at £583 Billion, in 2009 this changed to £629 Billion. By 2011 spending had risen to £687 billion. In fact, this is a trend that extends throughout Europe. Despite austerity cuts and their accompanying protests in France there hasn’t been a reduction in the national budget. Italy did reduce spending between 2009 and 2010, however, only for it to be increased the following year by such an amount that the previous year’s savings were rendered meaningless.

That said there have been waves of strikes, protests and riots in reaction to the government’s very real spending cuts. So why hasn’t the budget decreased or the ever-increasing national debt shrunk? Spending cuts were announced by George Osbourne in 2010 with a stated goal of reducing the deficit. The 2010 budget set aside 44 billion specifically to pay off the interest on the national debt. But paying off the interest does little to the debt itself which stands at nearly £1040 billion. The 2010 budget allocated a total of £697 billion, which even with the £44 billion removed for paying the debt interest is £653 billion, an increase on the previous year.

Meanwhile corporate tax currently stands at 24%. When corporate tax was first introduced in 1965 its rate was 40%, this rose to 52% before dropping steadily, leaving us with the projected corporate tax rate of 23% next year. Besides this, it has been estimated that a further 95 Billion is lost through corporate tax avoidance annually. On the bright side, despite a projected 710,000 public sector job losses by 2017, the size of government expanded to its largest since 1900 under David Cameron. There are now more ministers than ever before.

In short government spending has been increasing while public services and jobs have been cut. At the same time corporate tax is being dropped, continuing a trend started in the 70s. So while the Coalition’s rhetoric may emphasise austerity, the importance of cuts, how we are all in this together, the government has neither made efforts to genuinely reduce its spending nor its size but has rather shuffled spending to other areas and increased the number of ministers to unprecedented levels.

Andy Fletcher
- e-mail: Andy_Fletcher_Journalism@ymail.com

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  1. more details? — anon