Gloomy deficit and growth forecasts as health secretary Jeremy Hunt rebuked over spending claims
Ahead of Wednesday’s autumn statement, in what is likely to be a day of bad news on growth, borrowing, debt, taxes and broken fiscal rules – and with the chancellor acknowledging there are “no miracle cures” to the country’s economic strife – the government faced the additional embarrassment of its official statistics watchdog telling the health secretary, Jeremy Hunt, he was wrong to claim that NHS spending was rising.
Ministers have repeatedly said the health budget was rising in real terms.
But the chair of the UK statistics authority, Andrew Dilnot, following a complaint by the shadow health secretary, Andy Burnham, said he “concludes that expenditure on the NHS in real terms was lower in 2011-12 than it was in 2009-10″.
He has asked Hunt to “clarify” statements on the Conservative website claiming “we have increased the NHS budget in real terms in each of the last two years”. Hunt himself told MPs on 23 October that “real-terms spending on the NHS has increased across the country”.
The scale of the reduction in NHS spending is very small, but taken alongside the expected Office for Budget Responsibility report showing borrowing rising, it does mean Cameron is not meeting his promise at the start of 2010 to cut the deficit, and not the NHS.
The chancellor was expected to say on Wednesday: “In this autumn statement, we show that this coalition government is confronting the country’s problems, instead of ducking them. The public know that there are no miracle cures. Just the hard work of dealing with our deficit and ensuring Britain wins the global race.”
A Department of Health spokesman challenged Dilnot’s conclusion, saying: “The 2010-11 year should not be used as a baseline for NHS spending because the budget and spending plans were set in place by the previous government. For the first year of this government’s spending review, as Andrew Dilnot acknowledges, NHS spending increased in real terms compared to the previous year by 0.1%.”
The OBR will on Wednesday reduce its 2012 forecast made in March from 0.8% growth to about zero and for 2013 from 2% to about 1%. The target to reduce public debt as a share of national income by 2015-16 will also be missed. Osborne may also be forced to concede the structural deficit will not be eradicated for another five years, pushing the austerity to near the end of the decade.
In an attempt to give the economy a short-term boost ahead of the 2015 election, Osborne announced on Tuesday he was releasing £5bn for capital projects, mainly funded by cutting Whitehall departmental spending by 1% in 2013-14 and 2% the following year. Health, schools and overseas aid will be exempted from the cuts, as will local government in the first year. The Ministry of Defence will be allowed to carry an underspend this year to next year.
The capital spending will include £1bn for schools to find 50,000 extra places, including new free schools, academies and existing well run schools. London councils say the money is insufficient to meet the shortfall in places in the capital alone. The rest of the spending will go on transport, skills, including further education and science. Extra help will be provided to infrastructure projects.
The Treasury says it will mean capital spending on average will be higher in this parliament than in the previous three parliaments from 1997 to 2010.
A similar £5bn switch was announced in last year’s autumn statement. But research by the Guardian shows that more than half of the new capital investment announced in that autumn statement has not yet been spent on buying goods and services or paying wages, while projects have taken months to be ready and to process the money, awaiting planning permission or other hold-ups.
Most economists believe the continuing deterioration in the public finances will force Osborne to abandon his hopes of meeting his self-imposed rule to get public debt falling as a share of national income by 2015-16.
The Treasury believes the markets are already braced for the announcement and there will be no damage to Britain’s credit rating.
Osborne will focus on Britain’s “strivers” with a freeze in fuel duty aimed at household budgets while welfare benefits will be squeezed but not frozen. The chancellor has already said the rich will be asked to pay more, including an expected cut in tax relief on pension contributions for high earners.
The extra £5bn over the next two years on capital spending will have “a minor, almost negligible” impact on overall economic growth, the Ernst and Young Item Club said. The club, which said this week an extra £14bn on capital spending over the same period would raise economic growth by 0.5% of GDP a year, argued it would be difficult to estimate the impact of £5bn over the same period.
Nida Ali, economic adviser to the Item Club, said: “Although it is a step in the right direction it is likely to have a minor, almost negligible, impact on the growth rate. It is not likely to be very visible.”
The impact of extra capital spending is “likely to be even more negligible” because the changes will be fiscally neutral after the chancellor announced that the money would come from underspends in current budgets.
Ali added: “We think the £5bn on capital spending is a step in the right direction. But we feel this is still not enough to have a big impact on growth because he has tightened elsewhere to be able to find this £5bn.”
Gemma Tetlow, of the Institute for Fiscal Studies, said the £5bn would stimulate economic growth, though this would be within the margin of error of GDP forecasts.
Tetlow said the extra capital spending would stimulate growth by less than 0.2% of GDP a year using the OBR’s estimate that it provides a fiscal mutiplier of one. GDP stands at £1.5tn.
Osborne’s flagship plan for workers to be given company shares in return for abandoning their employment rights, to be confirmed on Wednesday, has already been rebuffed by business leaders.
The business department confirmed that fewer than five organisations out of 209 respondents “had welcomed the scheme and said they would take it up”. Osborne had put the proposal at the heart of his speech to the Tory conference in October.
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The Situation For the Poor and Vulnerable in the United Kingdom under
the Con Dem Regime is Disgusting and Diabolical
The Tories and Liberal Democrats Collaborators seem Determined to
Reduce People to Dickensian Style Destitution.
Stuff the Deficit Stuff the Economy the Quality of Life and Human Rights
of People Not to Suffer and Suffer is More Important Humanity is More
Importance than Gormless Whitehall Balance Sheets
I am Sick of the Poor Suffering because of Welfare Wrecking and the
Budget Frenzies of this Tinpot Regime
Osborne in today ,s budget statement kept referring to Labours failures ,one was about affordable housing ,does the ‘Green Policy’ also apply to politicians ,are they green ,we don’t want rhetoric of the past but action on the present .Osborne – worth £4,000,000 and is the heir to the Osborne Baronetcy .His first job was entering names of people who had died into a National Health Computer ,if he had the same job now his job would be made easier by him asking ATOS how many they had killed off recently . Him and Cameron are godfathers to each others children.He was Cameron’s hatchet man in public so as not to damage Cameron’s image.He robbed the public purse of £55,000 when he ‘flipped ‘his second home in order to pay less capital gains tax ,and he freezes benefits for the unemployed ,they will be too undernourished to be able to work if any jobs are created .Grayling who robbed the public purse of £100,000 on the renovation of a third property when he lived only 17 miles from parliament in his first house ,and Osborne is cutting the Welfare budget even more .The only reason he has postponed the fuel duty is the last fuel fiasco nearly brought the Labour Government down.The recent quantitative easing of £50 billion pounds was only beneficial to the rich .When asked why Osborne didn’t reign the banks in he said “they will only take their business out of the country” Under Wilson when inflation was 27% (1974)he passed a law forbidding holiday makers from taking more than £50 out of the country.(dubious moral standing).ACTION Osborne not rhetoric .www.brokenbritainundertories.com
THE TORY/MEDIA DISTRACTION
On the eve of the Autumn budget what happens – Kate Middleton is admitted to hospital with morning sickness ,Stuart Hall well know ex TV presenter arrested for alleged sexual offences concerning under age children ,it’s almost as if Joseph Goebels has risen from the grave to orchestrate these coincidental occurrences .Cameron the Tory Fascist leader with a Liberal front must know he’s been rumbled but carries on regardless .This must be an Old Etonian trait as Boris Johnson used the same ruse when running for The Oxford Union Presidency under the guise of being a supporter of the social Democratic Party .What actually came out of the Autumn Budget – no rise in fuel duty and old age pensioners and carers fared better than the unemployed/employed .So what do we glean from Osborne’s words of wisdom ,the last fuel fiasco nearly brought the Blair Government down ,pensioners are living longer and are still viable voter material ,if carers gave up their positions the influx of patients taken into care would cost the Government billions .That leaves the unemployed/employed ,both are basically in the same Political boat as non Tory voters,no prospect of jobs for the unemployed benefit frozen ,benefit cuts for the employed ,but with new sanctions in place they have no other alternative but to stay in dead end jobs with the prospect of being penalised for not seeking overtime or another additional job thanks to Vince Cable the man who made it easier for workers to be sacked .Fascism rolls on in the disguise of the Welfare of the Country’s Finances . http://www.brokenbritainundertories.com
So will the Nation Get Out and Protest against the Obscene Theft of
Billions From the Welfare Budget by this Bone Headed Budget or will
the Christmas Presents Pahlava and I Am All Right Jack Mentality take
Hold
There is No Life No Thinking about Things or Clue in Far too many
People by which I mean the Morons who Think there is No Alternative
to Capitalism there is Humanity and Common Sense
Tax The Rich Not the Poor