On Thursday 11th December the Labour party declared its policy for the next parliament. If they are elected they will cut deeper and quicker than the Conservatives have done. They will of course protect the NHS budget of £129.5b, the welfare benefits of £112.4b and the education budget at £90.2b, based on the current financial year 2013-2014.
Pensions are rising as ever more of the baby-boom generation of public servants retire with pensions often well above the average gross wage of private sector employees. That bill in 2014 was £143.2b and likely to be £150b in the year to April 2015 and probably £157b at the end of the first year of the next parliament. There is nothing that Labour can do about that.
Also our contribution to the EU this year of £18b will continue to rise at about 10% per annum. It is higher than otherwise it would have been thanks to Tony Blair who agreed to a reduction in the rebate. There is nothing Labour can or will do to stop that.
Also loan interest of £48b on the total debt in 2014 and which will rise as annual deficit piles on top of previous debt. There is nothing Labour can do about that either.
All of the above totals £541b this year and nothing Labour can do to reduce that total in future.
The remaining public expenditure is;-
Protection & policing £30b
General Admin £14b
All other Departments £66b
Which of these items will they cut to clear the £100b structural deficit, and find money for pensions that are increasing at £7b per annum and interest payments also rising at £2b per annum. That in a nutshell is the legacy of the ramped up public expenditure in the last two years of the last Labour government.
So if there is nowhere Labour can really make cuts in public expenditure, because UNISON won’t allow it, they will have to increase tax revenue by about £60b to start bringing the deficit down.
I fear this would be a repeat of what Wilson did by increased taxes for high earners and business owners which drove them overseas, until industry and revenue slowed and the country almost went bankrupt. Same old Labour ‘Tax & Spend’ otherwise they don’t have a workable plan and are still denying the deficit was their fault. They really cannot be trusted with the economy again.