George Osborne wrong on historical public spending rises

In his speech to Policy Exchange on Friday, George Osborne said:

We can either: stick with our long term course; stick with the commitment I made to spending growth of 2.1% for the coming three years; review the final year when we know the state of the public finances; and understand that in an economic slowdown this will mean tight spending plans and difficult decisions about government priorities.

Or we can head off onto the margins of the political debate and reduce spending growth even further for the sake of a short term argument.

Never mind that it would probably be unachievable in a slowdown, when tax revenues fall and welfare spending rises. Never mind that it would be lower than anything Margaret Thatcher achieved during the economic turbulence she faced in her first parliament. At least, we are told, it will give us 'a dividing line'.

Here is the historical list of real terms public spending rises since 1970:

In bold are all the years when public spending growth was lower than 2.1 per cent in real terms. Note that public spending growth was lower than 2.1 per cent in every year of Thatcher's second parliament. In the first two years of her first parliament, spending growth was lower than 2.1 per cent, although the average in her first parliament was 2.3 per cent. Over the 18 years of Tory government, the average was 1.5 per cent. Note also that in the first three years of Brown as Chancellor, spending growth was lower than 2.1 per cent.

Now, is it really correct to say that 2.1 per cent per annum spending growth is tighter than under Thatcher?

Comments

[john]

Well actually you've proved that Osborne was correct when he said "Never mind that it would be lower than anything Margaret Thatcher achieved during the economic turbulence she faced in her first parliament." 2.1% is lower than the 2.3% average for the first parliament that you cite above. So what exactly is the point of your post?

[Corin Taylor]

John, economic turbulence in Thatcher's first parliament was much greater than now, so the meaningful comparison is not with her first parliament, but with her entire record in office. You'll see that average real terms spending growth was 1.1 per cent under Thatcher, and 1.5 per cent under both Thatcher and Major (which of course included a second period of economic turbulence!).
George Osborne is trying to say that 2.1 per cent spending growth is tight. It's not. It's too high, and higher than Thatcher acheieved during her time in office (including both of her first two years). That's why Osborne is being economical with the truth.

[john]

except that you're accusing him of lying and he didn't, which is pretty underhand of you.

and how do you know that economic turbulence is less now than in Thatcher's first term - these spending plans are for the next 3 years. Are you saying that you're confident there won't be a recession?

[Corin Taylor]

Did I say "lying"? No. I said "wrong" and "economical with the truth" - both of which I stand by. We'll just have to disagree on this.

[Steve M]

Your Table relates to Total Managed Expenditure, which generally means that social security spending is removed.

The debate may be partly confused by this difference.

[Corin Taylor]

Steve, Total Managed Expenditure is the sum of Departmental Expenditure Limits and Annually Managed Expenditure. Annually Managed Expenditure includes social security benefits. You can see this on Table C11 here: http://www.hm-treasury.gov.uk/media/C/8/bud07_chapterc_288.pdf