Cathy Newman checks it out:
Budget box or Pandora’s box? That may be a little unfair, given that unlike Pandora’s mythical jar, the battered red box doesn’t unleash plague and disease. But it does traditionally contain some unpleasant financial surprises – alongside some pre-election goodies.
So the FactCheck team has been hard at work today to scrutinise some of the chancellor’s claims, and to unearth some of the nasties buried in the small print. It’s very much work in progress, but here’s what we’ve found so far. All quotes are from Alistair Darling, Budget speech, March 24 2010.
“Even after the severity of this recession, the claimant count stands today at 1.6m people. This compares with three million people in the recessions of the early 1980s and 90s.”
The claimant count is just that – the number of people claiming unemployment benefit.
There are caveats about using it for historical comparisons – the rules around who can claim unemployment benefit change over time. We’re still waiting to hear from the Office for National Statistics to what extent the figures are adjusted to take these changes into account.
But taking Darling at face value, at the last count, there are just under 1.6 million people on unemployment benefit.
However, things weren’t quite as bad as the chancellor suggests in the previous recessions. We scoured the ONS’s seasonally-adjusted figures, but the dole queues never stretched to three million mark in the nineties.
Admittedly they did get very close – more than 2.9 million – peaking around the start of 1993, six months after the country had finally lumbered out a double-dip recession. The latest set of figures showed UK plc limping out of recession – but it could well be another six months before unemployment peaks this time around.
“The claimant count is still lower today than we inherited in 1997.”
Just. In February 2010, 1,585,100 people were claiming unemployment benefit. Thirteen years ago, in April 1997, the number was 1,662,600.
One month later, as Labour swept to power, it dropped to 1,619,600. We could spend a long time here dissecting different monthly or quarterly or even annual measure, but the chancellor is broadly correct.
“Nearly four million people have been helped off the claimant count in the last year alone.”
Official statistics show how many people come off unemployment benefit each month. Tot up the total and 3,908,500 people seemed to come off the dole in the 12 months to February.
But this isn’t necessarily a net figure – the chances are some of these have come off the dole, gone back on, then come off again.
Four million is still not to be sniffed at – though of course, the fact it’s been so high is a sign of the turbulent times that we live in.
For comparison, 4,136,700 people started claiming unemployment benefit during that same period (again, some of those may be the same people counted more than once). So Darling could also have made the claim today that just over four million people had gone onto unemployment benefits. Perhaps unsurprisingly, he didn’t.
“Indeed, in the recession of the 1990s the rate of home repossessions was twice as high as now.”
The number of homeowners has increased fairly steadily since the early nineties, but the number of repossessions hasn’t reached the peak of the John Major government.
In 2009, 46,000 homes were repossessed, an increase of 6,000 on the previous year. That compares to 43,900 in 1990, and 75,500 in 1991. On an annual basis, things weren’t quite twice as bad then, although they were much higher.
“I expect the economy to grow by between 1 and 1 ½ per cent. I will bring my forecast for 2011 in line with that of the Bank of England, to growth of between 3 and 3 ½ per cent.”
It’s become something of a FactCheck budget tradition to point out the discrepancies between Darling’s forecasts, and those of the rest of the economic world.
For this year, he’s not far off. According to a March round-up of independent forecasts published by the Treasury, the average prediction was that growth would be around 1.3 per cent.
But – as has happened before – in the longer term Darling tends towards the optimistic end of the range.
He expects the economy to grow by between 3 and 3.5 per cent in 2011; independent forecasts said it would average 2.1 per cent. They ranged between 0.9 and 3.4 per cent. But he is in line with the Bank of England growth forecast of 3.1 per cent.
“I have no further announcements on VAT, on income tax, or national insurance rates.”
Maybe not, but an eagle-eyed trawl through the budget book has already found a couple of nasties hidden in the small print.
In December’s pre-budget report, the government announced a freeze to the personal allowance (the annual amount of cash you can keep to yourself before you have to start paying tax on it). The budget confirms the freeze, which kicks in next month, is still going ahead.
Strictly, not a change. But when Darling first announced the measure, inflation was negative – so keeping the allowance constant wouldn’t really have hurt people in real terms.
Now, however, we now know that RPI inflation in the year up to February was 3.7 per cent.
To avoid people feeling the pinch, you’d expect personal allowances to be increased by the same amount – £240 – in order to keep pace with rising prices.
And don’t panic – but some non-consumer-related postal services are losing their zero-rate VAT status, and being taxed at the standard 17.5 per cent, page 132 of the budget shows. The Royal Mail has assured us it won’t affect the cost of stamps or parcels.
“At the pre-budget report we committed government departments to find over £11bn of new savings through reforms, without damaging front-line services. Departments will today publish details of how they will make these savings from 2011, as we work towards the spending review.”
Finally, a clue as to whether some of the spending cuts might fall. But we looked through these documents and found more questions than answers.
DEFRA – saving £194m
An official told FactCheck: “All quite deliberately vague. We haven’t got any detail on where those savings will be gathered. We haven’t got a breakdown of the detail: it doesn’t exist.”
FCO – saving £50m
An official told FactCheck: “It’s an ongoing programme. We certainly don’t have a list as of today. It’s a figure that we have agreed with Her Majesty’s Treasury, as part of Building Britain’s Future or whatever the slogan is that’s on our press release.”
FactCheck asked another official what the “corporate services reform programme” was, which – according to the press release – would release £10m of savings. He said: “Corporate services… Christ! Let me see if I can find out.”
Home Office – £140m black hole. Says it will yield £350m in savings, but only £210m listed.
Department of Health – saving £4.35bn
Up to £555m savings from reducing staff sickness absence in the NHS.
Ministry of Justice – saving £343m
A thousand posts definitely moving out of London – but no discussion yet as to who that might be or where they might go.
Department for International Development – saving £150m
DfID has told FactCheck that cuts of £89m were announced last autumn – although the efficiencies are being brought forward by a year – leaving just £61m of new savings announced today.
Spot the difference?
Spot the similiarity between these two statements from Business, Innovation & Skills and the Deparment of Communities & Local Government? We’ve asked the Treasury if the two departments are double-counting the amounts – we’ll let you know what their response is when we get it:
Business, Innovation & Skills – saving £300m
“Saving £120m from working with Arms Length Bodies…This includes savings expected through
streamlining and better aligning central government functions at the regional level – including co-locating Regional Development Agencies, Homes and Communities Agency and Government Offices to reduce duplication of functions.”
Communities & Local Government – saving £200m
“£70m savings from working with our Arms Length Bodies…Including savings expected
through streamlining and better aligning central government functions at the regional level – including co-locating Regional Development Agencies, Homes and Communities Agency and Government Offices to reduce duplication of functions.”
Cathy Newman’s verdict:
Alistair Darling was broadly right on his claims about unemployment and house repossessions, but he didn’t go out of his way to publicise the effective cuts to personal tax allowances, and is still somewhat optimistic on growth figures.
But where FactCheck finds him most wanting is on the savings he’s promised across government. He clearly wanted to put the Conservatives on the back foot by announcing detailed cost-cuts. But while some departments – like the Ministry of Justice for example – have mustered some convincing looking cost-cuts, others were hilariously candid about just how back of the envelope their plans are.
Labour needs to do a lot more to prove it has a credible plan to pay down that staggering £167bn of borrowings.
UPDATE: Shadow Chancellor George Osborne read out some of FactCheck’s funnier quotes on efficiency savings in parliament the next day, much to the mirth of listening MPs. Watch the video below: