Page last updated at 15:15 GMT, Friday, 3 July 2009 16:15 UK

Martha Kearney's week

By Martha Kearney
Presenter, BBC Radio 4's World at One

"Well, that was a high fibre show", my colleague Juliette Dwyer remarked this week.

In other words all that analysis may have been a touch indigestible but it was certainly good for you.

Stand by for some more All Bran now as I am going to write about public spending.

Gordon Brown and David Cameron
The party leaders got very animated about spending at PMQs

You have probably heard impassioned exchanges on the World At One and other programmes for weeks now about what lies in store in the coming years.

And yes, it is vitally important because it will affect our local schools, hospitals, houses, police, rail services and much else besides.

If you look at the Treasury Red Book which is released at the time of the Budget, it says that public spending will fall after this year (from £276.192bn in 2009/10 to £274.059bn in 2010/11) but that is because the government has brought forward some capital spending in order to boost the economy.

So what is going to happen after that? At prime minister's questions this week David Cameron challenged Gordon Brown to admit that government spending is going to fall in the medium term.

Titanic argument

The prime minister denied that and said there would be a "0% rise". That provoked huge laughter. In fact this was clarified later.

He had meant to say that there would be a 0.7% increase in the years from 2011 to 2014.

But that is for current spending. Let me quote Robert Chote from the Institute for Fiscal Studies.

SPENDING TERMS
Capital spending: Investment new schools, hospitals, railways etc
Current spending: Covers public sector wages, goods and services etc

"The text of the Budget states clearly that 'current' spending (which excludes capital investment) will rise by 0.7% a year in real terms over the three years of the Spending Review.

"Rather more coyly, it says that investment spending will "move to 1¼% of national income by 2013-14".

"This is in much the same way that the Titanic "moved to" a new level of the Atlantic in the early hours of 15 April 1912.

"The detailed figures show real cuts averaging 17.3% a year or around 40% comparing the last year of the next Spending Review with the last of this one. "

So clearly big cuts in capital spending which the government admits but what is going to happen to current spending within different departments?

Line of attack

We would have known this summer but the spending review has been postponed (until after the election according to Lord Mandelson but that is another story).

According to the IFS, if you take into account rising debt interest bills, social security costs and other spending that the Treasury has little short-term control over, spending on public services and administration will drop by 2.3% a year in real terms, or around 7% by the third year.

If you ring fence health and international development as the Conservatives want to do would mean cuts elsewhere of 10.9 per cent.

If you protect schools as well as the government has said, the cuts elsewhere rise to 13.5%.

And this week front line police were added to the list of protected species.

Areas that are relatively investment intensive - such as transport and housing which make up 40% of all public sector investment - are set to be relative losers in a very tight spending settlement.

There is a debate going on within the government about how to present its argument.

Some in Labour feel it is not a credible position to say that the Tories are going to cut everything while Labour will invest.

But cabinet ministers close to Gordon Brown believe that this is a fruitful line of attack.

They predict that the costs of unemployment will not be as high as predicted so there will be more money to spend than estimated.

They also say that voters should not have to be penalised by having poor public services in order to pay for the mistakes of the bankers which caused the recession in the first place.

So how to balance the budget? We've been through the equivalent of a war, I was told, it will take far more than five years to set all this straight.

Well, I guess that is enough fibre for one day. But I have a feeling that is not all we have heard on the public spending debate by a long shot.



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