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Monday, 15th June 2009

The claim that Labour won't cut spending is just Balls

Fraser Nelson 6:57pm

When Gordon Brown sends ministers out to lie about his spending plans, he can only really depend on Ed Balls to do it effortlessly. Some, like Andy Burnham, don’t understand his elaborate scam – and tie themselves in knots trying to. But Liam Byrne is a former businessman who does understand a balance sheet (and understands the concept of cooking the books). Yet he was instructed to hold a press conference today on Cameron’s cuts. Sadly, I wasn’t invited* but Byrne was ably grilled by the hacks who were present – and the following exchange with Nick Watt of The Guardian (which he has blogged) is worth repeating here. In it, Byrne concedes that spending post-2011 will fall.

NW: Can I ask you a question and if you could give me a yes or no answer that would be very helpful. When Gordon Brown set out the spending envelope in the House of Commons last week from now to 2014, that amounted to, as you said, a cash increase of £86bn. But if you use the Treasury forecast [of inflation], that will amount to real terms cuts of 0.1%. Yes or no?

LB: Well, you've got to separate two kinds of spending here. You've got to separate current spending, that is the day-to-day cash in hand. In real terms that grows by 0.7%.

NW: That is for current period spending period. I'm talking about post-2011.

LB: I'm talking about the post-2011 period in which current spending grows by 0.7% a year. If you look at capital spending – so building police stations, building schools, building hospitals – if you look at the share of capital spending in the economy that does come down to 1.25% by 2014 for the very simple reason that we have moved it all forward. So 1.25% of GDP is something like twice the level of capital spending that we inherited in 96-97. But it is simply a matter of arithmetic. If you bring it all forward you are going to get a peak which is the peak that you get in this year. It spikes up to just over 3%. So it is a bit of a red herring, I think, to try and mix up capital spending and current spending. You know, if you put the two things together you get the numbers that you talk about. 

The translation: “Guilty as charged”. Byrne heroically tries to blow smoke, introducing new metrics of “1.25% of GDP” etc. I do love his preposterous claim that the concept of total spending is somehow a “red herring”.
 
The issue is quite simple: those spending figures the Prime Minister read out in PMQs last week represent a real-terms cut. Spending after April 2011 is falling. Factor in debt interest, and public service budget will fall by an ever sharper amount – 7% say the IFS. Protect health and its 10%. This is not complex. There will be cuts: the only question is whose.
 
Byrne was also asked about on Balls’ own-goal claim that education spending would go up after 2011. Balls said: “But if we can get the economy right, as I believe we are doing, I think we can see spending on schools and hospitals rising in real terms after 2011”.
 Byrne’s response:-“There is an ‘if’ in that sentence. The right time to set out our position on tax spend and departmental budgets is either at the time of the Pre-Budget Report or at the time of the Budget.  The Chancellor will set out the position.”
 
Good to see even Byrne doesn’t place much store on HM Treasury’s official estimates of a trampoline recovery, the claim that the economy will grow by an average 3.5% in the three years to April 2014. But for his information, this is the official position of the government and its debt repayment schedule is dependent on such a recovery. A joke, of course, but Byrne really should try a little harder to take it seriously. If the debt markets realise that his repayment schedule is a joke, there will be a price to pay.
 
*The press conference was announced on email yesterday, then cancelled on email. But when they put it back on again, they didn’t send an email. They only telephoned daily lobby journalists – and so columnists like myself were excluded. Labour later claimed they didn’t want to send out another email, as journalists don’t always check email.

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Short the UK

June 15th, 2009 7:12pm Report this comment

The big test for UK plc is whether the FT will rollover and swallow the Labour spin. They've done it for 12 years, so I ain't got much hope.

FT = F****** Terrible.

Tiberius

June 15th, 2009 7:14pm Report this comment

Fraser I think you'll find, after your questioning during THAT press conference, that you're also off Brown's Christmas card list.

But no matter - the card would only end up as a recycled VAT return envelope anyway.

Turbo

June 15th, 2009 7:29pm Report this comment

Fraser, i am just wondering if you are thinking life will become difficult for lobby journo's like yourself now that I think nearly all the media have turned on Brown.

Will we have a Campbell style manipulation, where critical people like you are simply not allowed to ask Brown and his bf Balls questions?

P.S. Please do keep it up! You are doing an essential public service...Thank god not every journo is Kevin Maguire!!!!

Chuck Unsworth

June 15th, 2009 7:41pm Report this comment

"Labour later claimed they didn’t want to send out another email, as journalists don’t always check email"

Er, right....

So, send an e-mail and expect journalists to read it. Then send another e-mail cancelling everything and expect journalists to read it. Then call round an invited (and therefore exclusive?) group? And then suggest that journalists don't read e-mails? So, how many journalists did they expect might turn up to the original invite? How many did they expect might turn up to a cancelled event?

This is either bleeding awful management or sinister manipulation. Given current track records this is clearly a deliberate exclusion of some 'troublemakers'.

At what point does New Labour run out of friends? The invitation list must be getting shorter by the day. Still, it reduces the costs of 'refreshments' no doubt.

mitch

June 15th, 2009 8:04pm Report this comment

12yrs of browns bullshit and we are immune,Simply put no one in this country believes a word the PM says.

What a state we really are in brown is a crap PM but underneath a really crap human being too.

J Miller

June 15th, 2009 8:09pm Report this comment

It could, of course, be both bleeding awful management and (an attempt at) sinister manipulation. Either way, it's dreadful. The thought that we might have another eleven months of this is enough to make one lose the will to live.

Jonathan Cook

June 15th, 2009 8:13pm Report this comment

The government really do think that the public are fools.

They know the lobby are fools and hate able journalists who are able to easily expose their lies.

Gordon's face was a picture at last weeks press conference. He doesn't like you at all Fraser. Clearly you fall into the band of able journalists.

Keep up the good work.

chris

June 15th, 2009 8:31pm Report this comment

The main thing here is to make sure that whenever you get a response that is factually incorrect you respond in your newspaper or TV or radio interview by using the terms 'liar' and lying'.
I know people like Andrew Marr would prefer not to do this because it is impolite, but that is no excuse. It is your duty to get the truth from the politicians.
Another way of helping to expose the deceit is to use the services of a lot more people who know what they are talking about.
It always amazes me how the politicians get away with it because the interviewer has no idea about the subject. There is far too much political headline behaviour and not enough knowledge of economics in the media, yet there is plenty of reliable information available.

Denis Cooper

June 15th, 2009 8:48pm Report this comment

It would be really useful if you experts could work out just what fraction of the present government spending is being financed by borrowing.

My rough sum is that if the budget deficit will be about 12% of GDP, and spending will be about 50% of GDP, then a quarter of the money being spent by the government is borrowed money - one pound in every four.

Is that correct?

Edward

June 15th, 2009 8:56pm Report this comment

"This is either bleeding awful management or sinister manipulation".

Chuck. It's both.

dorothy wilson

June 15th, 2009 8:57pm Report this comment

Balls was terrible on the World at One this lunch time - all bully and bluster. He talked over both Martha Carney and Michael Gove. He repeated the same thing over and over again, even when Carney had told him to move the debate on.

His main point seemed to be to get Gove to say that the Conservatives would cut spending in the current year. So will the election be this autumn after all?

Alf Tupper C.R.O.F.

June 15th, 2009 9:31pm Report this comment

Liam Byrne's ineptness rarely fails him.

Moraymint

June 15th, 2009 9:34pm Report this comment

The Labour Government tells lies; big, porky pies; get used to it, y'all.

Indeed, we've all learned to live with Government underhandedness for over a decade now. The lying is now becoming frenzied and epidemic across Government as Brown and his political gangsters spin the web of deceit with ever more energy. Looks increasingly like panic to me.

The great thing is that Gordon Brown, living as he does in his own alter-world, is quite oblivious to the contempt in which his Party is now held by the British people. Payback, perhaps, for the contempt in which Brown and his acolytes have held the British people for 12 years.

When the time comes, the British people will destroy the Labour Party.

Paul

June 15th, 2009 10:04pm Report this comment

Don't they just shoot themselves in the foot?!!

Instead of the figures, I am thinking instead about how it looks like Liebour orchestrated manouvres in order to avoid tricky questions from those they knew might ask?

It would be so much easier to talk honestly about necessary cuts! Is this symptomatic of a kind of mental derangment?

Fraser Nelson

June 15th, 2009 10:38pm Report this comment

Denis Cooper, its not a matter of working out - HM Treasury publish monthly forecasts which do estimate the deficit at about the 12% level. What's even more scary is factoring in QE and working out that the BoE prints about £1 n every £3 the state spends.

Victor, NW Kent

June 15th, 2009 10:49pm Report this comment

Dennis Cooper - you are pretty much on the button. The best estimates at the moment do indeed say that only £3 of every £4 is paid for by current revenue.

I think that the Tory answer to all of this should be that they will cut out the waste and keep the essentials. By now there can hardly be any adult who cannot see that this government has been profligate and wasteful.

I think someone else used the phrase "a bonfire of the quangos". I read a list some time back which showed 37 quangos feeding off the NHS.

Alex

June 15th, 2009 11:29pm Report this comment

YES.

What matters is that the truth (this) reaches the main stream media in an understandable form ... and that the BBC, Sky, Telegraph, Times, FT et al, do not accept the Governments lies

Keep up the good work Fraser.

Dan Thomas

June 16th, 2009 12:33am Report this comment

Fraser, while he concedes your point finally, his argument isn't wrong. Capital spending has been brought forward - this gives a big increase in this year and next, and a drop off in later years. This will also impact on the total spending figure.

The current spending figures should be considered separately; they are not falling as steeply as total spending.

This profile would be true in even greater terms had even more capital been brought forward, as the Tories had suggested at one point.

The real question now is; given that capital spending will fall in the next few years, and current spending on public services will be diminished due to increased debt payments within the envelope available, what will be cut? So far, neither party has suggested that they have a better, or more acceptable, plan for where to make the savings.

Frank P

June 16th, 2009 1:20am Report this comment

Just in case Scott Burgess from the defunct Daily Ablution ever reads this, will ye no come back again, Scott? If ever this country needed your wit, wisdom, research talents and bloody minded doggedness, 'tis NOW! How can you resist the fun of the dying days of NuLab?

This blog (and other imposters) are indeed 'piss-poor substitutes'.

GeoffH

June 16th, 2009 7:31am Report this comment

Paul "It would be so much easier to talk honestly about necessary cuts! Is this symptomatic of a kind of mental derangement?"

It is an article of faith with Labour that all societal problems can be solved by spending more money.

Preferably money from 'the rich' who are there to be squeezed until the 'pips squeak'.

All the way through Labour's life and every time it's in government, the only issue is that of spending more money. Not how it's spent nor how it's raised.

Always more, more, more.

It's not derangement but an article of faith.

Andy Leeds

June 16th, 2009 7:36am Report this comment

Government spending needs to be radically cut - something like 25%. We have a bloated state which Labour have created to give their mates jobs.

And I did tell you Fraser you were a very naughty boy at Gordon the Morons little 'do' and you would be off the Christmas card list. You have no right to complain !!

Simon Stephenson

June 16th, 2009 7:56am Report this comment

Paul 10.04pm

"It would be so much easier to talk honestly about necessary cuts! Is this symptomatic of a kind of mental derangment?"

No, it's symptomatic of the fact that most of the general public would see honest comment as being ivory-tower intellectualism. They are comfortable are people who talk at their level which, without wishing to appear superior, is of discrete, compartmentalised issues and very much in the present.

To make spending cuts palatable it's necessary to show that the alternative is even worse. That's quite difficult, because the alternative is in the future, and therefore needs to be predicted or anticipated. Most people don't really work their lives out this way. Their triggers are contemporary feelings and peer group expectation. Planning for the future is really only a tiny part of most people's make-up.

No political party finds it attractive to be the purveyor of bad news - this is why the spending debate is such a tortuous one. To be honest, Labour is in the most difficulty because its natural supporters would contain the highest proportion of those with difficulty thinking outside the present. But all parties have problems.

strapworld

June 16th, 2009 8:02am Report this comment

Excellent article Mr fraser, however just one small thing you say,in your opening sentence that Balls can tell Browns lies 'effortless'

Well, I have heard him on the radio and seen him on the television and he is a disaster -for Brown- he just oozies 'LIAR LIAR'.

I thought Gove was particularly forensic in his remarks.

Balls was and is out of his depth. Journalists are too fond of building up these people into some kind of warrior.

He is no warrior. He is a schoolyard bully, pure and simple. That is why, I think, that Brown gets on so well with the boy.
He recognises himself in Balls!

Just keep referring to him as BULLY BALLS.

Patrick

June 16th, 2009 8:23am Report this comment

Some commentator - unfortunately, I can't remember whom - referred as follows to the weasel wording now being used about government investment: finding a new level at 1.25% of GDP. He said this is like the Titanic finding a new level in the Atlantic.

Hatstand

June 16th, 2009 8:51am Report this comment

GeoffH. It may be an article of faith: it is undoubtedly deranged.

Wily Trout

June 16th, 2009 8:56am Report this comment

Every time Labour announce that public spending will rise they should be asked by how much taxes will rise to keep up. The DCSF is keeping up its frenzied sally of press releases announcing masses of funding for schools. But schools have been having to cut staff for the second year in a row now.

R

June 16th, 2009 8:58am Report this comment

Short the UK:

The FT seems to be doing OK this morning, its reporting of this story will make painful reading for Balls. He is described as having been 'slapped down' and the IFS are quoted rubbishing his claims.

logdon

June 16th, 2009 4:57pm Report this comment

So where's Darling in all of this? Or is Balls the de facto Chancellor now?

Oh, I know, Brown's reshuffle may have been put off course by a defiant Darling but in his deranged mind it all went as planned.

logdon

June 16th, 2009 5:57pm Report this comment

http://www.dailymail.co.uk/news/article-1193077/Labour-anger-Balls-acts-surrogate-chancellor-spending-pledge.html

The penny drops.

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