During an election all parties make commitments to do things which cost money. Voters expect them to put a cost against each item. Commentators then add up the costs and say that this is what each party is going to spend. This process is way too simplistic to make meaningful comparisons.
Spend v invest
If I spend £5000 on a holiday, when I get home all I have left are the memories. If I spend £5000 on a car I have both the asset of the car and the cost saving of reduced bus fares. I have ‘invested’ in the car, instead of ‘spending’ on the holiday
If a government ‘spends’ on purchasing assets, particularly those which will generate revenue, then this is investment – and a saving for the future. The assets of the nation will have increased.
Similarly, if a government sells off assets and then spends the money it is really a ‘spend’ and should be reported as such – spending our savings.
The cost of unemployment
As a civilised society we provide a safety net for those who are unable to work at a given time. If a government ‘spends’ money on something that allows them to work then there is an immediate saving in benefit payments. Plus there is an increase in government income from tax and NI contributions, and VAT on whatever the person purchases with their income.
Maintaining health and Correcting past shortfalls
A household could cut down on their spending by stopping eating. This is clearly a crazy thing to do, leading to wasting and death.
Similarly certain basics of infrastructure of society need maintaining, without which society becomes sick and will eventually fall apart. Making ‘savings’ in these areas are extremely costly on the health of the nation, and correcting past shortfalls takes more time and effort to remedy than if the ‘saving’ was not made in the first place.
The cost of impatience
If you want something immediately it always costs more than if you are ready to wait. We can pay a high price for ‘same day delivery’ or we can get free delivery in a few days time.
A government can also make expensive choices from impatience. Setting a deadline by which a deal has to be done significantly weakens the negotiators hand and will always lead to a more costly deal
So when we look at election costings we must not simply look at a totaled up figure. We really need to think about what category they are in. Are they investment, are they too high due to impatience, are they compensating for past under-investment, are they allowing people to contribute usefully to society through good jobs?