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George Osborne & the Spending Review – everyone is lying

Tom Winnifrith Sunday 30 June 2013

 

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And so this week George Osborne laid out his plans for how the Government will spend money it does not have over the next few years. The reactions were sadly predictable and the truth is, my friends, that they are all lying.

On the right there was praise for canny George who so cleverly snookered New Labour with populist pledges about tackling welfare scroungers and who is clearly a safe pair of hands to act as custodian of the nation’s finances. Middle England and the Bond markets are meant to be reassured.

On the left the BBC, its sister paper The Guardian and other associated loons continued the post 2010 narrative of wicked Tory cuts, back to the 1930s, blah, blah, blah.

Both sides are lying although it seems that the BBC/Guardian agenda has won as most folks do actually think that Government spending is being cut. It is not. In 2009-2010 (Labour’s last year in power), public expenditure was £671 billion. In 2015-16, according to the Chancellor’s figures it will be £745 billion.  And George has form in getting his sums wrong so if I was offered a spread bet at £744-46 billion I’d be a big buyer. In absolute terms Government spending has risen year on year since 2010 with new records set each time. In inflation adjusted terms Government spending is down by less than 1%.

Of course some folks believe in the Money Tree. We, my friends, know that it does not exist. How has this Government largesse been funded? By issuing more debt. Government borrowing (ignoring off balance sheet items like PFI, bank bailouts and student loans that are bound to default) will have increased from c£1000 billion when Labour left office to £1,500 billion by the time of the next election. You thought Gordon Brown was useless? George Osborne is presiding over the largest increase in Government debts in history!

Of course there have been cuts. But the big cost-centres of Government: the NHS, Education and of course welfare and pensions have just carried on lapping up the fruits of the money tree. Osborne proposes minor tinkerings in 18 months’ time but he is nowhere close to closing the deficit as he promised he would do. And as the cost of borrowing increases ( as it must) the cost of servicing that ever greater debt will start to ramp up big time and eat into any trivial savings that pathetic George might be planning.

At some stage the bond markets (if not Middle England or the Guardian/BBC axis of evil) will wake up to the appalling state of the UK’s finances. It is happening already. At current rates by 2020 the UK Debt to GDP ratios will be close to where Greece was just before the balloons started to go up.

Yet still the left bleats on about wicked Tory cuts and the right thinks that cuts are being made. Truly some folks here in Bankrupt Britain live in a parallel universe.

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About Tom Winnifrith
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Tom Winnifrith is the editor of TomWinnifrith.com. When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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My guest in this week’s show which is sponsored by Open Orphan PLC (ORPH) is a former editor of this website Flip Flop Ben Turney. We discuss the problems with AIM, New World Oil & Gas, Nostra Terra (NTOG), touching on the mud being slung at Ben by some folks but on the real issues that company faces, on Touchstone Exploration, Big Sofa (BST) and many other matters, notably AIM PLC director expenses. I also discuss companies who switch Nomads too often. Yes that includes Versarien (VRS) and its forced change of today. If you like this podcast and can’t wait seven days for more of the same and are tired of being a cheapskate you should listen to my Bearcast every day.

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