Malpass on fiscal restraint

Luke Malpass writes:

Despite the rhetoric around savings, what the Government has largely done is cut in some areas to fund increases in others. If successful strategies are about aligning resources to priorities, that may be defensible. But it is not “savings” in any absolute or net sense — it is simply different spending decisions.

There have been no net savings to the Budget’s bottom line since this Government took office. Spending has increased. Willis defends this on the basis that the Government does not want to cut essential services.

Her explanation was: “It is not a saving in the sense that we are spending less as a government; it is a saving in the sense that, in the absence of making those savings, we would not have been able to fund increases to health and education and essential services without borrowing more.”

This is a good analysis. The Government has done a good job in redirecting spending from wasteful areas to frontline services. This should be applauded, and not something that Labour would have done.

However overall spending has remained too high. Labour blew it out from 28% of GDP to 34% and it is still way above the 30% that Labour and Greens promised as a cap in 2017. The Government must commit to getting it back under 30% – soon rather than later.

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