In 1997 Labour took the electoral decision to stick to Ken Clarke’s ‘eye-wateringly tight’ spending plans for two years despite the buoyant economy. And, despite the hype, the first Comprehensive Spending Review added little to that until this year.
As a result, contrary to what you may have heard, Labour has overseen a decline in the proportion of GDP spent on public services, even excluding social security.
In the last Tory year in office, investment in public services was 29.1% of GDP. It currently stands at 27.1% of GDP.
After the second CSR is taken into account, in 2000/1 (general election year) this still only improves to 28.2%. The ‘#19bn’ for education and ‘#21bn’ for health in the first CSR was over-hype, and has been quietly forgotten by Labour’s spin doctors.
So, the irony is the new ‘#43bn’ bonanza has not only been accumulated for three years at the expense of hospitals and schools, but these announcements only just begin to bring public spending levels as a proportion of GDP back to those inherited from the conservatives.
So much for ‘bonanza’. Of course, a growing economy means it is more in absolute terms, but most of that is taken up in real wage growth. So class sizes and waiting lists are worse, not better, whilst pensioners still only get 75p.
CSR II proves Labour could have helped our much beleaguered health service, our worn out teachers, our tired old school buildings and the public transport system long before now. And with a social security underspend of #2.5bn last year, they could have increased the miserable 75p state pension, not spent it on national debt repayment (our debt is already the lowest of any G7 country).
As it is, Labour is going to have to win back a cynical electorate who has seen record ‘giveaways’ announced – but seen no real change. The Conservatives, however, have an even harder job – explaining how they can cut #16bn as promised, when Labour are spending less as a percentage of GDP than either Thatcher or Major.
– Matthew Taylor is Treasury spokesman for the Liberal Democrats.
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