No wonder Alexander wants to keep an eye on spending
26 April 2012The Financial Times
Sir, I was amused by your statement that the UK’s budget deficit ballooned from £35bn in 2007-08 to £157bn in 2009-10 because of “shortfalls in tax revenue”, not “lax spending control in government departments” (“Government departments face having to report spending monthly to Treasury”, April 23). On the numbers for those years, UK public spending increased from 40.9 per cent of gross domestic product in 2007-08 to 47.6 per cent of GDP in 2009-10. Tax and National Insurance receipts fell by 2.2 per cent of GDP over the same period. Spending increases were much the bigger factor.
The real point lies in the pre-crisis years. You will remember the “lax spending control” on the National Health Service budget (which more than doubled, in real terms, between 2000 and 2010) and the public sector workforce (up from 5m to 6m over the same period). Further, if you look at the Treasury estimates for government borrowing for the years 2002-03 to 2007-08, you will see that the final out-turn numbers exceeded the first estimates by fully £135.4bn. The government proved incapable of holding to reasonable spending limits. This is not hindsight. Some were arguing for much more realistic levels of public spending at the time.
I think you can forgive the current chief secretary to the Treasury for wanting to do at least something about this.
Andrew Haldenby, Director, Reform, London SW1, UK
@reformthinktank
