There has been lots of talk about spending cuts. Yet, for all the talk of axes being swung little noticed are some figures on page 45 of the Red Book which shows that Government spending will rise. This year it will be £696.8 billion. Next year it will be £699.8 billion. In 2012-13 it will be £711 billion. While in 2013-14 it will be £737.5 billion. This is at current prices - not something that can be excused by inflation.
Sure there will be winners and losers. Spending cuts in some areas, increases elsewhere. But overall the Government is planning to spend an extra £40 billion a year, in real terms, on top of the spending level from the Labour Government. John Redwood has noticed this. So have the IEA. But generally the media have not given much prominence to these figures - as they confuse the broader narrative.
We also have the rich being taxed at 50% compared to 40% under the previous Government and we have Capital Gains Tax increased from 18% under Labour to 28% under a Conservative-led Government - this regarded by Paul Goodman as a victory.
The Chancellor said in his Budget:
I asked the Treasury to examine what would have happened if we had increased the rate much further beyond 28%, and its dynamic analysis showed that that would have resulted in smaller total revenues.
I'm pleased that The Treasury have cranked up to doing "dynamic analysis" of whether increasing a tax rate will increase tax revenue. Please may we see their "dynamic analysis" on the revenue implications for the increase of the top rate to 50%?
So does all this mean that Britain is going to get even more socialist that it was when run by the Socialists? No. A useful ready reckoner for how socialist a country is comes from the share of wealth taken by the state. So if page 45 of the Red Book depresses you then keep going to page 89 for some more cheering news. Last year the state consumed 47.5% of GDP. By 2015 it is scheduled to fall to 39.8%. Still much too high, of course.
In 1965 the Shadow Chancellor Iain Macleod told the Conservative Party Conference that:
"There is a limit, and that we are already beyond it, to the percentage that we can take of the GDP in public expenditure and to the burden that one can put on personal taxation without a dramatic drop in efficiency and enterprise and there I take my stand."
At that time the state was spending 35 % of GDP.
