Twenty Years of Conservative Rule: A Mixed Record on Spending and Taxation

Strategic Insights -

The Conservative government has been in power for 20 years, with their watchwords being cutting public spending and lowering taxation. However, by 1999, two decades from their first election victory, the Conservatives will barely have succeeded in doing either. According to the latest budget projections, government spending will have only decreased by 3% of national output since Mrs. Thatcher's victory, while taxation will actually be 1% of national output higher.

Key Takeaways:

  • The Conservative government's spending reductions have been largely ineffective, with the government spending only 3% less than it was in 1979.
  • Taxation will actually be 1% of national output higher by 1999, despite the party's pledge to cut taxes.
  • The budget plans predict that government spending will fall to 39.25% of national output by the last financial year of the century, but this is predicated on a degree of stringency that the Government has never achieved before.
  • Departmental spending is supposed to fall by £1.8 billion in real terms over the next three years, with fancy reductions in areas such as health spending (a 0.6% fall), higher education spending (a 0.8% fall), and grants to local authorities (a 4.4% reduction).
  • The cuts are designed to offset a rise in the social security budget by £3 billion in real terms, an increase of more than 4%.
  • The Conservative chancellors since 1979 have avoided targeting health and education for direct cuts in spending, preferring to seek out softer targets.
  • Public housing has been another favourite area for cuts, with expenditure on housing falling by more than half since 1979.
  • The NHS has increased its share of national output to around 5%, but raw figures tell us little, as it has been struggling to keep up with rising healthcare costs and demands.
  • Education spending will fall sharply in real terms, despite the government's claims of a 1% real rise in the central government element.
  • The real spending on education has actually fallen since 1979, and the government's defense of not needing to spend more is based on demographic changes, which has reduced the number of people entering education.
  • Despite the government's claims of increased spending on education, the reality is that the benefits of education spending vary across the income scale, with the rich doing better than the poor.

Statistics:

  • Government spending will have only decreased by 3% of national output since Mrs. Thatcher's victory.
  • Taxation will be 1% of national output higher by 1999.
  • Government spending is predicted to fall to 39.25% of national output by the last financial year of the century.
  • Departmental spending is supposed to fall by £1.8 billion in real terms over the next three years.
  • The social security budget is forecast to rise by 3% a year to the end of the century.
  • NHS spending has increased in real terms, but only just kept up with rising healthcare costs and demands.
  • Education spending will fall sharply in real terms.

Sources:

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  • WILL HUTTON, RICHARD THOMAS, and LARRY ELLIOTT, (no date)
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