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In the Red

One of the best bits of advice an MP ever gave to me was to ignore all the claims and counter-claims that inevitably fly around after the Chancellor has made a Budget statement simply look in the Treasury’s red book. After a spending announcement, it’s the green book.

Watch extracts from George Osborne’s spending review statement to the Commons

The moment the Chancellor sits down, this invaluable document is made available to MPs and Westminster journalists –and nowadays, thanks to the internet, to anyone who cares to visit the Treasury website.

There have been a few other changes over the years, the traditional plain single colours were ditched a few years ago in favour of something more eye-catching but plain red was restored in the austerity of the emergency budget in June. This time it’s plain green.

It’s a great source of unvarnished information. For example, take a look at page 70 of the latest document. It tells you how much the Welsh Assembly Government will have to spend, what the Treasury calls the Departmental Expenditure Limit:

2010-11 £15.0 billion
2011-12 £14.5 billion
2012-13 £14.5 billion
2013-14 £14.5 billion
2014-15 £14.6 billion

Suddenly all is clear, half a billion less next year, then a freeze for the next two years and a very modest increase after that, with inflation eating away the whole time. But in his speech, George Osborne said “the resource budget … in 2014-15 … for Wales will rise to £13.5 billion”.

The resource budget isn’t the whole picture; the Chancellor conveniently forgot to mention that he’s slashing capital spending. Meanwhile, Carwyn Jones was arguing yesterday that the cut next year won’t be £500 million but £900 million. Today his civil servants have produced a new set of figures:

2010-11 £15.12 billion
2011-12 £14.26 billion
2012-13 £13.93 billion
2013-14 £13.60 billion
2014-15 £13.39 billion

They actually agree (almost) with the Treasury figures but they’ve adjusted them for expected inflation. The First Minister argues that gives a truer picture.

But we don’t actually know what’s going to happen to inflation over the next five years. So it’s best to stick to the actual cash figures, always remembering that inflation will take its toll.

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