Politics and Governance in the UK

Second edition

by Michael Moran

Update 44 – December 2013

The Chancellor’s autumn statement, or: ‘It’s the politics, stupid – continued…’

In Update 43 published last July I analysed the comprehensive spending review and stressed that it needed to be viewed as a political, as much as an economic document. In the 1992 American Presidential election campaign the victor, Bill Clinton, famously had a slogan pinned to the wall of his campaign headquarters, reading ‘It’s the economy, stupid’. All analyses of public spending statements in Britain should be read alongside the injunction ‘It’s the politics, stupid’. This is particularly true of the Chancellor’s 2013 ‘autumn’ statement, which was actually delivered in early winter (5 December). The autumn statement is a kind of mini budget, an interim statement on the progress of the economy and public finances. Traditionally therefore it has been thought of as less important than the annual budget. But politically this statement was immensely important, simply the general election, which must be held in the spring of 2015, was now within sight. In other words, given modern election cycles, the campaign had to all intents and purposes begun. Two considerations dominated this round of announcements: struggles within the coalition as the two partners tried to position themselves for 2015; and efforts by the Chancellor to set a series of tactical problems for the Labour opposition in debates about, especially, public spending. The day before the statement the Chief Secretary to the Treasury, Liberal-Democrat Danny Alexander, published an enormous list of public spending infrastructure projects – a combination of recycled previous announcements and wish lists that depend on private sector involvement. A similar event preceded the comprehensive spending review: that now seems to be a permanent feature of public spending politics, though exaggerated under the coalition by the need to give the Liberal Democrats a brief moment in the sun. Likewise a number of pet Lib Dem projects – such as the extension of free school meals provision – were funded, but only until after the election of 2015. More important for the long term are two linked features: Annual Managed Expenditure, which readers of my previous update will recall is a key to the total volume of spending, is forecast to rise in the period after 2016; but the Chancellor is forecasting a small overall surplus by 2018 on the back of sharp projected cuts in departmental budgets. In short the Chancellor was doing what any rational politician does: putting up with what he cannot control, in Annual Managed Expenditure; planning to cut what he can control – but prudently (or cynically) postponing the hard decisions until after the general election.

The official version of all this can be read at:
https://www.gov.uk/government/topical-events/autumn-statement-2013

But for any serious student of the politics of all this the first starting point is the invaluable briefings of the Institute for Fiscal Studies, this time at:
http://www.ifs.org.uk/budgets/as2013/as2013_carl.pdf