Why Liz Truss' promise of 'no cuts' to public services isn't what it seems

Liz Truss told parliament today that she would "absolutely" stick to her leadership campaign promise not to cut spending on public services.

But there's good reason to think her assertion doesn't is not what it seems.

The pledge has raised eyebrows because the Prime Minister is to borrow £45billion to cut taxes, mainly for wealthier households.

And yet his government is expected to announce a debt reduction plan to satisfy the financial markets, which have gone haywire over his unfunded tax cuts.

So how does the Prime Minister can he do such a promise? Where's the sleight of hand?

A clue came immediately after the Commons session. Asked after PMQs by reporters in Westminster, Ms Truss's spokeswoman warned while she would of course stick to the promise, there would be 'tough decisions' on spending.

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This set off alarm bells as the tone was rather different from that of the prime minister in the chamber 30 minutes earlier

Pulsed further, the spokesperson was especially unwilling to say whether the spending promises made in the government's current spending plan would be increased in line with inflation.

This is crucial, as inflation is currently hovering around 10%.

So a 10% increase is needed just to stand still, and not increasing allocations would mean a 10% reduction for departments.< /p>

So when Truss says she won't reduce government spending, she talks about what economists call "cash terms", rather than "real terms".

You can probably guess from the names that the latter is what really matters - especially when inflation is so high and the gap between the two is so wide.

In a scenario where cash expenditures for utilities do not increase by 10%, they end up with higher costs due to higher prices, but their funding does not increase Consequently. So the money doesn't go that far.

There are also other reasons to be skeptical. Due to demographic factors such as aging populations and sheer population growth, some particularly expensive services, such as the NHS and social care, require a real increase in conditions simply to provide the same level of care to a greater number of people using the service.

So even if an increase in real terms is promised in some areas, it may lead to a reduction in funding per patient.

All of this explains why the Prime Minister is happy to say there will be no cuts in public spending. That doesn't mean there won't be austerity.