Andrew Lilico: The key table from the Autumn Statement

UPDATE: A peril of blogging under time pressure.  I have mis-represented the Policy Exchange June 2009 paper.  That argued for £100bn of cuts in underlying spending, with £55-£65bn in cuts in total spend.  Its recommendation is thus much closer to what is now planned than I suggested in the Original Post.

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I’ve been tough on Osborne. Now time to laud him. The total discretionary consolidation he’s committed to now is £147bn of cuts in the deficit, of which £116bn are cuts in spending. I’ll say that again: Osborne is committed, now, to cutting £116bn from the underlying level of spending. When I and colleagues wrote, in mid-2009, that underlying spending should be cut by some £55-65bn as “the minimum ambition - a necessary first step” (reflecting my own earlier arguments here that we might need to take between £62bn and £95bn off, “for starters”) we were regarded as so radical as to be scarcely plausible. When I arrived at Policy Exchange, Conservative spin-doctors still went out on serious defensive briefings if a minister made any comment that could be interpreted as implying a £0.5bn reduction in spending. The serious folk at Reform had recently written about how £38bn might be cut from spending. The axe-wielding beserkers at the Taxpayers Alliance had, with the IoD, proposed cutting £50bn. Yet a month later, at Policy Exchange we were suddenly proposing cuts in the underlying budget of £65bn, and that was just for starters!

But now look where we are. It was indeed “just for starters”. The government’s proposed underlying spending cuts now amount to £116bn. And Osborne’s programme now implies spending cuts continuing for six successive years. The Policy Exchange study of international and historical episodes of large spending cuts identified that in the most successful spending cuts programmes, spending was still lower, six years later, than in the peak year. But Osborne’s programme is much more radical than that. It isn’t simply that spending is still down after six years. No, on his programme, if delivered, it will be still falling!

When we criticise Osborne – and I do – we must not forget either the huge task he faces, nor the political constraints under which he operates, nor the remarkable scale of the plan he actually has.

I remain a strong supporter of this plan. More may still need to be done — what he did today was a start, but if things go ugly, he’ll have to do more. But what he has already announced is, in itself, huge.