Chancellor runs out of road – FactCheck
How much we invest on roads, rail and construction has sparked the latest war of words between the three parties.
Last week, Nick Clegg said he was going to be “self critical” and admit that the government hadn’t spent enough on infrastructure. “We comforted ourselves at the time that it was actually no more than what Alistair Darling spelled out anyway,” he said.
Not true, said Labour. At Treasury Questions on Tuesday, Rachel Reeves, the shadow chief secretary to the treasury, brandished figures suggesting the coalition government was spending less on infrastructure than Labour had planned to.
She said: “It is simply not correct to say that the Government have matched the plans of [Alistair Darling]. The Office for Budget Responsibility say that in the first three years this Government is spending on infrastructure £12.8bn less than the plans that they inherited. It is £6.7bn lower in this year alone.”
The Tories didn’t like it. George Osborne even accused Ms Reeves of “not being completely straight” and was rebuked by the speaker for it. You can watch the exchange here:
He corrected himself and said she’d been “creative in the use of the numbers that she’s put before this parliament”.
“The number she’s using is the amount of money Labour was spending on capital before the General Election, but they set out plans to cut capital spending after the general election,” he said.
“We have exceeded those plans,” he said, “and it is completely hypocritical for the Labour party to claim that it would have spent more on capital when it clearly would not have.”
Who’s right? FactCheck’s done some sums.
Labour are using figures from the Office for Budget Responsibility (OBR) and Treasury figures contained in the public finances databank to make their claim.
Economists are divided on what defines infrastructure spending – is it just new projects such as energy investment and roads, or is maintenance included? Civil servants and politicians tend to refer to capital spending – which covers both.
Labour said that from 2010-11 to 2012-13, it had planned to spend £160.4bn on public sector gross investment, as set out in the OBR’s June 2010 pre-budget report.
They’ve then used the Treasury’s figures to show that in their first year, the coalition government spent £58.1bn on the same thing.
For the next couple of years, according to the OBR’s Economic and Fiscal Outlook, spending on capital investment was £47.8bn in 2011-12, and forecast to be £41.7bn for 2012-13.
Which means that in the first three years, if the OBR’s forecast for the current year is correct, their spending on infrastructure has been £147.6bn.
That’s the “£12.8bn less on infrastructure” to which Ms Reeves refers.
It is, however, slightly unfair to include the current year’s figures. After all, the current year is still ongoing – essentially, the coalition’s spend for 2012-13 remains a forecast until April.
It would be more accurate to compare 2010-11 and 2011-12, which are complete.
For the first year, Labour had planned to spend £61.3bn, and £50.7bn in 2011-12 – a total of £112bn. The public finances database and the OBR suggest that during these years, the coalition had spent £105.9bn.
Which means that the coalition has spent £6.1bn less over the last two years than what Labour had planned for over the same period.
It’s also worth mentioning that these figures are updated all the time, and the OBR concedes that the figures produced in their December 2012 report had since been revised by the Office for National Statistics.
The revised figures show that during 2010-11, £58.151bn was spent on public sector gross investment. The following year, £49.137bn was spent – a total of £107.288bn.
Which means that for up to date figures, the coalition has spent £4.712bn less than what Labour had said they intended to spend.
Latest figures from the ONS show that Mr Osborne’s claim to have spent more on infrastructure than what Labour had planned is wrong.
Labour had forecast £112bn for infrastructure for the previous two years; the coalition has spent £107.3bn over the same period.
We put this to the Treasury, who said that they’d boosted spending on infrastructure by £17.9bn since coming to power. FactCheck pointed out that even after the “extra spend” over the completed years was taken into account, they’d still come up with a lower total. It’s also more accurate to say they’d cut less deeply than to claim they’d boosted spending.
The Treasury also said that it wasn’t fair to compare Labour forecasts with actual coalition spend. Until we pointed out that that’s what Mr Clegg, Ms Reeves and Mr Osborne had all done.
When we asked the Treasury for a response as to why Mr Osborne had claimed the coalition government had “exceeded the plans” set out by the last government, they offered none, simply saying that it was clear the chancellor had been referring to spending plans for the entire Parliament.
What is worth a look, however, is how much the two sides had planned to devote to infrastructure spending as a proportion of GDP, as that indicates the economic context and takes inflation into account.
Alastair Darling’s March 2010 budget shows that Labour had forecast a cut in spending on infrastructure, from 4.1 per cent of GDP in 2010-11 to 3.3 per cent the following year.
In the event, just under 4 per cent of GDP was invested in infrastructure in 2010-11 under the coalition government, dropping to 3.1 per cent the following year. A difference of 0.2 per cent, which on that scale, means relatively little.
So in the bigger picture, no-one can really claim the crown of being the greatest cheerleader for investment in infrastructure.
By Fariha Karim
On Wednesday evening, Chris Leslie, Labour MP for Nottingham East, referred to the above post in the House of Commons and asked the deputy speaker, Nigel Evans, whether he had been “given any notice that the Chancellor is available to come to the House this evening to apologise again for getting his facts completely incorrect”.
Doesn’t look like it. “I have been given no notification that the Chancellor…will make a statement from the dispatch box this evening,” Mr Evans replied.