The Public Finances: An Electoral Battleground?
| DOI | 10.1111/j.2041-9066.2010.00016.x |
| Published date | 01 April 2010 |
| Date | 01 April 2010 |
| Subject Matter | In Focus |
age of 0.8 per cent annually between 2011–12 and 2014–15. But
some areas would be protected, with National Health Service
spending going up in line with infl ation in 2011–12 and 2012–13
and expenditure on schools rising 0.7 per cent per year in real
terms over the same period. The Conservatives have committed
themselves to protecting NHS spending in real terms while making
spending cuts elsewhere and introducing public sector reform. The
Liberal Democrats have said that there should be no ring-fenced
areas of spending and also propose reform and cuts across a range
of departments. Whichever party takes offi ce after the election
one thing is certain – the effects of the recent economic crisis will
remain on the agenda for years to come.
In Focus was compiled by Richard Whitaker, University of Leicester.
The Public Finances: An
Electoral Battleground?
In Focus
During the last two years the UK has experienced its longest
recession since the second world war. Figures from the Of-
fi ce for National Statistics show that the economy contracted
during six consecutive quarters starting from the second quarter of
2008. In its pre-budget report, published in December 2009, the
government forecast improvements in GDP with growth of 1.25
per cent in 2010 and 3.5 per cent in 2011 and 2012. But given the
depth of the economic problems, concerns about the UK’s levels of
public debt and the fact that the economy is generally a priority for
many voters, it is no surprise to see economic issues taking centre
stage in the run-up to the general election. The biggest debates have
focused on where public spending cuts should be made and what
other measures should be taken to reduce the budget defi cit.
Figure 1 shows the level of net government debt annually over
the period 1997–2008, with a breakdown of fi gures by quarter for
2009. Dealing with this debt will require a move away from the
signifi cant increases in public spending of recent years. As can be
seen from Figure 2, public expenditure under new Labour rose (in
real terms at 2007–8 prices) from around £387 billion in 1997–8 to
a projected £614 billion for the fi nancial year 2010–11, an increase
of about 59 per cent. This was very much in keeping with succes-
sive Labour election manifestos pledging increased investment in
public services and utilities.
As Figure 3 illustrates, spending on social protection, health,
education, defence, and public order and safety all rose signifi -
cantly under successive Labour administrations. But given the
perilous state of the public purse, maintaining such increases in
spending in the future will not be sustainable. Questions about
which government departments should see cuts and how big these
should be have been the cause of much debate among the political
parties. Labour’s plan, as set out in the December 2009 pre-budget
report, is to increase public sector current expenditure by an aver-
FIGURE 1 Net debt (£bn) at current prices, 1997–2009
Source: O ce for National Statistics (2009) Public Sector Finances November 2009, 18
December 2009, http://www.statistics.gov.uk/pdfdir/psf1209.pdf
FIGURE 2 Public sector current expenditure, 1997/98–2010/11 (£bn in
real terms at 2007–8 prices)
Source: HM Treasury (2009) Public Expenditure Statistical Analyses 2009, Cm 7360.
FIGURE 3 Public spending by policy area, 1997/98–2008/09 (£bn in real
terms at 2007/08 prices)
Source: HM Treasury (2009) Public Expenditure Statistical Analyses 2009, Cm 7360.
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