The Chancellor’s magic money tree [Op-Ed]

magic money tree – The Sloman Economics News Site

The Chancellor is once again resorting to whataboutery around calais. It is important to point out new X-ray and infrared technology will cost in the millions. In comparison to the full government budget the Chancellor is looking around for trivial sums to try to create a gotcha moment over his £5 billion blackhole. 

If need be the additional expenditure can be retroactively corrected like the VAT error was. The statement in question did not claim no new funding would be needed and nor did it claim it could be done for free within the department. We’re not here to talk about Calais and the fact the Chancellor is still choosing to deflect and say “no but u” sums up his attitude to his job. 

The Chancellor’s central claim of the budget being £100 billion for Schools and only the Education budget only being £60 billion in 2014 remain false. This has already been sourced and this assumption that the Chancellor told the House that his spending decision was made has gone unaddressed and is wrong. This claim has been sourced previously and the Chancellor has not chosen to address this. 

Increases to the pupil premium are not capital expenditure. It is a permanent increase which requires day-to-day funding. 

Sen and EHC funding per pupil eligible being boosted is also a permanent boost which is not capital expenditure.

The Chancellor repeatedly talks about capital spending. However what was announced is not capital spending, so this means that the Chancellor is cutting capital expenditure for our education. He is funding day-to-day expenditure by slashing capital budgets so unless the funds are to be replaced they’d stop this capital spending indefinitely.

No one is claiming capital projects are done in perpetuity however the decision to cut capital budgets could very well jeopardise ongoing projects such as the construction of schools and leave the Department underfunded to fund genuine one-off initiatives. 

The figures that the Chancellor has provided for the Institute of government shows capital expenditure across the whole government, not just the Department for Education and what it demonstrates is that even if the Chancellor could utilise money underspent across the whole government he would still barely cover the costs of these new programmes which are structural programmes. 

There are not billions underspent in the Department of Education. Underspending is normal as departments face sanctions if they over spend. Unspent capital expenditure is carried forward to the next year’s capital budget and in the Department of Education this will only be millions of pounds in terms of the Education budget. Examples of underspending include academy schools not using their full budget however this money remains with the School.

The Chancellor himself admitted that carrying forward underspending would “prevent the accumulation of spending power over time”. If the Chancellor believes there was underspending specifically in the Education Department last year he should inform the House as to what this spending was, how much and if it will pay for the programmes announced. Underspending is not guaranteed but is something that can happen for an array of reasons.

The Chancellor’s very own Institute for Fiscal Studies report states the following:

Education spending turned out relatively close to plan over the period, showing neither a tendency to persistently undershoot nor overshoot plans between 1999−00 and 2010−11

Dismantling his claim. The Chancellor has shifted from there being lots of spare funds to underspent money to justify his claims. This isn’t a difficult issue and he is trying to confuse people and pull the wool over their eyes. He can not create money from thin air and such I will be voting contempt in the Chancellor when the motion is read later today.

This article was written by the Right Honourable /u/Friedmanite19 OM KCMG KBE CT LVO PC MP, The Leader of Her Majesty’s Most Loyal Opposition

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