The truth about Nick Clegg’s capital spending cuts

Capital spending is falling dramatically

Nick Clegg will today call for a “gear shift” in capital spending. But he cannot escape the truth about his government’s austerity programme. Capital spending is being cut by 29 per cent.

The Guardian reports today that:

Nick Clegg will announce plans on Wednesday to “accelerate” government capital spending projects, conceding the government must now perform a “gear shift” to ensure state spending and infrastructure play their part in Britain’s economic recovery.

But the paper has been briefed that:

“there is no new money being announced nor any spending being brought forward from later financial years…

“The spending reflects money already committed by the chancellor in his comprehensive spending review and Treasury sources said there was no question of bringing forward funds from future years to invest in the economy earlier.”

The table below shows the settlement in the Spending Review 2010. Capital expenditure by government departments is projected to fall 29 per cent between 2010-11 and 2014-15. This includes cuts to school and other education building projects of 60 per cent, 34 per cent for environment, food and rural affairs, and of 17 per cent for the NHS.

Meanwhile, the Green Investment Bank will only be capitalized with £3 billion of public money and will not be allowed to borrow until 2015-16 – despite the historically low yields on government debt currently standing at 2.46 per cent on 10-year bonds.

Clegg’s analysis is right. The economic situation has “changed dramatically” for the worse in the past six months. But doing something about it will require slowing the pace of spending cuts and launching new infrastructure spending of the kind announced by President Obama recently.

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  • William

    As every man and his dog knows,if you want to increase capital spending,within the proposed framework of increased government spending and borrowing, you have to cut the elephant in the room, the gargantuan social welfare budget that pays people to do nothing,live on benefit in central London and so on.Not everybody can disappear off the roll of unemployed by working for an EU funded think tank(a contradiction in terms).

  • Paul Odtaa

    William you must stop reading the Mail – it hurts the head.

    I accept that benefits need reforming to make it easier to come off benefits if one moves into work – eg someone was quoted in the Independent working 5 hours a week – which effectively gave him £1 per hour, which did not cover his bus fair.

    He will then work full time for the Christmas rush, which means he will go off Job Seekers, but he will be back on the job market after Christmas and will have to go through the process of re-applying for his benefit, which means he’ll probably end up with no money for weeks.

    This process should be reformed but seems to be a mess.

    However, what the government should be doing are:

    Scrapping Trident, which is only funding the American arms industry and its main purpose seems to be keep up with the French.

    Providing equivalent support to general industry at the same level we give to the UK arms industry as do Germany, France, Holland, USA etc etc.

    Stop speculators being able to offset against tax loans for taking over UK business as Philip Green’s £1.2 billion tax avoidance scam be sending the cash to his tax haven resident wife. We’re the only industrial country that does it.

    Work with the EU to stop the very, very rich and the corporations hiding money in tax havens. Osborne’s recent tax deal with the Swiss torpedoed the EU’s negotiations to hit Switzerland. Part of the scheme was to hit places like Jersey, Cayman Islands, Isle of Man etc, but of course the Eton Blue trust funds are located in these places allowing them to fund their political hobby.

    The list could go on – but the very, very rich and the financial sector should at the very least pay their fair share of tax.

    And William the reason people on benefits are living in expensive properties is to do with Thatcher’s allowing the selling off of public sector housing, the refusal to allow councils to replace the loss stock, the elimination of rent control and the policy that gives corporations tax benefits to hold tens of thousands of empty properties in London.