Philip Booth criticises Vincent Nichols' pre-budget article in the Sunday Telegraph
Last week’s budget hit the headlines for apparently proposing government spending cuts of £110bn over the next five years. In fact, these are just cuts in projected increases: Sir Humphrey’s definition of a cut in spending is not the same as the definition most households and businesses would use. Total Government spending will rise more or less in line with inflation, though certain departments might face deep cuts, especially if welfare spending outpaces inflation.
We currently have unprecedented levels of peacetime Government spending – the Government will spend 54p in every pound you earn this year. Quite contrary to the suggestion in Archbishop Vincent Nichols’s recent Sunday Telegraph article, the emergency Budget did not address the consequences of the crash; it addressed rapid and unsustainable structural growth in Government spending. As a proportion of national income, the British Government is spending about half as much again as, say, the Australian government. Something, somewhere, is wrong.
There is a danger that we will deal with these problems by “salami slicing” – and the budget did quite a bit of this. Benefits might be cut a few per cent, school budgets squeezed, and so on. This approach, if continued, will be a wasted opportunity. Wholesale reform of welfare, health and education is likely to bring much greater benefits. This need for reform is widely understood in political circles and the lack of recognition of this in Archbishop Nichols’s Telegraph article was a huge omission. The archbishop’s main budget plea was for the Government not to decrease financial spending on overseas aid and on needy people receiving benefits.
This focus on public spending inputs, as if they automatically turn into outputs, is naïve and reductionist. Is there a relationship between overseas aid inputs and development? The evidence suggests not. Some focused aid may help, but overseas aid can distort economies and systems of governance in ways that can cause the poor in under-developed countries serious problems. We know that Government provision of aid can crowd out more effective charitable endeavours – US charitable giving to the under-developed world is an order of magnitude greater than that of most EU countries. Government aid via charities can also distort the activities of those charities. Cafod’s income from Government is now equal to 30 per cent of its charitable donations. Is it a coincidence that spending on educat