Spending Review: can transparency trump temptation?

Up to now, the message from the Coalition government has largely been doom and gloom. However, in the last few days there have been a lot of 'good news' stories around the Spending Review, such as protecting schools and lesser than expected defence cuts. Do these stories reflect the reality of the government's plans, or are they just a way to get some more positive headlines around a very difficult announcement?

‘Gordon counting’: Labour’s first spending review

It is fairly straightforward for government to make numbers look better than the underlying reality. I was amused to hear Evan Davis taking Nick Clegg to task on the Today Programme last week. As Evan pointed out, the £7bn extra spending Nick was talking about was really the adding up of numbers over years. The per year total of extra spending turned out to be nearer to £3bn per year. This particular trick became notorious in Labour's first Spending Review, and was christened 'Gordon counting' at the time – making spending increases seem many times larger than they actually were. Labour came to regret the presentation of that spending review. The view was that, by making small increases sound large, the government had over-promised.  When the subsequent under-delivering occurred, people were disappointed. There may be something in this, but personally I doubt anybody (including those working on public finances all the time) has any idea how big or small £1bn is. I suspect the presentation did hurt the Labour government – but by the drip-drip effect of people sensing they were not being told the whole truth.

The cautionary tale of the last budget

The last budget gives us another cautionary tale. It was fairly obvious to most experts listening to the Chancellor's announcements that this was not a progressive set of measures. Indeed the IFS called it regressive the day after. It turned out that if you select your measures (lose some from this government, keep some from the last) and your time period (2012 is better than 2014), then you can get figures that say it was progressive. There are a lot of smart people in the civil service, and they can perform this kind of arithmetic alchemy on almost any measure you want. If we are to be successful in getting the public finances back under control, such talents should be put to more constructive use in preparing the announcements. Let's hope the government won't be tempted to disguise the reality as the pain bites over the next few months and years. Otherwise the government will be wasting its credibility denying the obvious.