The cuts announced by the new Coalition Government have dominated proceedings in Westminster since the General Election, and Full Fact has been kept busy checking claim and counter-claim from each side of the political spectrum.

 

But is this debate built upon a misunderstanding – are the cuts nothing but a myth?

 

 

That was apparently the suggestion of Tory stalwart John Redwood on BBC’s Newsnight programme yesterday evening.

 

Speaking to Kirsty Wark, the one-time contender for the Tory Premiership said: “There aren’t going to be any cuts.”

 

“If you look at the Budget figures, there is going to be a £90 billion increase in current spending over the five years of the Parliament,” Mr Redwood added.

 

So is the public sector worrying about nothing?

 

 

Looking at the Budget ‘Red Book’ as Mr Redwood suggests, the numbers broadly seem to support the former Welsh Secretary.

 

In 2009/10 total public sector expenditure was estimated at £600.6 billion, which rises to £692.7 billion in 2014/15. This equates to an increase of £92.1 billion across the five years of the current Parliament.

 

So is Mr Redwood right to deny that cuts are imminent?

 

Not quite. As the Treasury tables also reveal, capital expenditure – the amount of money invested by Government each year in developing services – is actually forecast to fall by 2015.

 

In 2009/10 total capital expenditure stood at £68.7 billion, which is scheduled to be cut to £44.9 billion by 2015.

 

Total managed expenditure – including both capital and resource spending by Government- does therefore rise by a more modest £68.2 billion over the term of the Parliament, a fact acknowledged by Mr Redwood on his blog on this subject.

 

 

Look more closely at this figure however and the impact of the supposed cuts becomes more apparent.

 

As the Budget documentation notes (clause 2.12), once inflation is factored into these calculations, a real terms cut of four per cent can be seen in total managed expenditure. Public sector current expenditure is to fall by one per cent, whilst public sector gross investment is to decrease by some 31 per cent by 2015.

 

As the Institute for Fiscal Studies told Full Fact, it is important not to neglect these figures.

 

“Any sensible analysis has to take account of inflation, as spending doesn’t mean much in nominal terms,” a spokesperson said.

 

“It is misleading to say that there won’t be any cuts,” she added.

 

 

Whilst a glance at the raw data might give the impression that the Coalition Government is planning to pump more money into public services, a more detailed analysis cannot support the sort of assertion made by John Redwood.

 

Given that inflation determines the lengths to which these nominal sums will stretch, it is important to take account of the real term impact of the budgetary measures. These indicators all point towards decreased spending by Government.