UK News

Insights from the UK and beyond

from Breakingviews:

UK’s big build dreams still dogged by past binge

Photo

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The UK government wants austerity to pave the way for bold modernisation of Britain. In reality its cuts don’t reverse the previous explosion in government spending and there isn’t much money for its big infrastructure dreams.

This week’s Comprehensive Spending Review was mostly about cuts to the so-called resource budgets of most government departments though leaving health and education aside. Here austerity is unquestionable, including 10 percent reductions for the Justice, Environment and Communities departments and the Treasury itself. The Office for Budget Responsibility says another 144,000 public jobs will go, after well over half a million gone already. With a near-freeze on public sector pay, the civil service resource budget will be 2 percent lower in 2015-16 than in the current fiscal year.

The problem is the less controllable elements of government spending: pensions, social security and interest bills. So-called Annually Managed Expenditure is still rising. The government projects that it will climb by 18 percent from the current 2013-14 fiscal year to 395 billion pounds in 2017-18. And so in total, the austere government’s spending is projected to rise to 765 billion pounds in 2017-18, 6.3 percent higher than this year.

  •