We are going to hear again and again over the next few years a bunch of Labour stories about cuts to capital spending that are quite simply lies. Everytime you hear about how a school or a hospital isn’t going to be built because of Tory cuts be aware that this is a bare-faced lie.
In the December 2009 Pre-Budget Report Labour chancellor Alistair Darling announced a halving of net public sector investment. Here he was talking about real investment (capital spending) not the usual Gordon Brown nonsense about wasteful revenue spending being “investment”. Don’t expect Ealing council leader Julian Bell to know what I am talking about.
In a government spending crisis capital spending programmes are always an easy target. You can make a big impression on the finances without visiting immediate pain on electors. In order to salvage some financial credibility Darling savaged the capital programme in the dying days of the Labour government. He failed though to identify which programmes would be trimmed by how much.
If you go to table B13 on page 189 of the December 2009 Pre-Budget Report you can see how public sector net investment was due to be halved by Darling, see below (click to enlarge). Look at the net investment line which goes from £50 billion in 2009/10 to £22 billion in 2013/14.
Darling’s cuts were so shocking that in his own budget speech in June 2010 the Tory chancellor George Osborne said:
We have faced many tough choices about the areas in which we should make additional savings, but I have decided that capital spending should not be one of them. There will be no further reductions in capital spending totals in this Budget.
Go to Table C13, page 102 of the June Conservative budget and you will see that the capital programme outlined there is almost identical to Darling’s, see below (click to enlarge).
Over the next few years we will also have Labour folk memories of the Thatcher regime revisited. Like much Labour mythology they are nonsense too. Go and look at Treasury figures for public sector gross investment as a percentage of GDP that are hidden away in the back of the budget documents.
– Related article: Claims for Mis Sale of a Pension Product.
You will see that whilst the Tories probably cut investment too much in the late nineties (a trajectory maintained by Labour for four years after they came into power) they consistently invested much more than Labour under the mendacious Gordon Brown ever did. Of course Brown always confused current spending with capital spending. But the facts are that in eighteen Tory years average public sector gross investment was 4.3% of GDP. Under the first twelve years of Labour it was 2.7% of GDP.