George Osborne wrong on historical public spending rises

February 18, 2008 9:59 AM

In his speech to Policy Exchange on Friday, George Osborne said:

We can either: stick with our long term course; stick with the commitment I made to spending growth of 2.1% for the coming three years; review the final year when we know the state of the public finances; and understand that in an economic slowdown this will mean tight spending plans and difficult decisions about government priorities.

Or we can head off onto the margins of the political debate and reduce spending growth even further for the sake of a short term argument.

Never mind that it would probably be unachievable in a slowdown, when tax revenues fall and welfare spending rises. Never mind that it would be lower than anything Margaret Thatcher achieved during the economic turbulence she faced in her first parliament. At least, we are told, it will give us 'a dividing line'.

Here is the historical list of real terms public spending rises since 1970:



 In bold are all the years when public spending growth was lower than 2.1 per cent in real terms. Note that public spending growth was lower than 2.1 per cent in every year of Thatcher's second parliament. In the first two years of her first parliament, spending growth was lower than 2.1 per cent, although the average in her first parliament was 2.3 per cent. Over the 18 years of Tory government, the average was 1.5 per cent. Note also that in the first three years of Brown as Chancellor, spending growth was lower than 2.1 per cent.

Now, is it really correct to say that 2.1 per cent per annum spending growth is tighter than under Thatcher?

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