When are spending cuts not spending cuts?

When it comes to Government announcements concerning the economy, be it a statement, the budget or a comprehensive spending review, a good rule of thumb is to wait until the dust settles and the facts emerge before rushing to comment.

The mainstream media doesn’t have the luxury of time as they have copy deadlines, so reproducing press releases and soundbites about George Osborne’s spending review without analysis is the order of the day – not any different to any other day when you think about it. But some blogs, that look beyond the headlines to look at the detail, can be relied upon to give us the story straight.

So, step up the ever reliable and news-breaking EU Referendum.

As Dr Richard North makes clear, public spending is not being cut at all in this spending review. The ‘cuts’ are to nothing more than reductions to forecast spending. The top line figures are completely clear. Public sector spending in 2010-11 remains as forecast at £696.8 billion. In 2014-15 public sector spending is now forecast to be £739.8 billion. That is an increase in public spending between now and then on £43 billion. How is this a spending cut?

What we are seeing is a massive redistribution of spending. It is a smoke and mirrors exercise. As EU Referendum makes clear, money will be spent on servicing existing and additional debt and patching some of the massive blackhole in pensions.

Tax increases will account for much of the additional spending. But the fact remains the state will not be shrinking, it will be bigger. The question now is, when will the media and the markets realise this? When that is answered, perhaps this damnable coalition managerialist spin operation in Downing Street will be asked how an increase in public spending of £43 billion is a spending cut.

It seems clear the ‘new politics’ is no different from the old.

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