What is George Osborne up to? This is the question posed by what the OBR's Robert Chote calls (pdf) a "roller-coaster" path for public spending. He foresees current departmental spending falling by 9% in nominal terms between 2014-15 and 2018-19 - a cut of over 15 per cent in real terms - but then jumping by 7% in 2019-20.
Maybe there has been a clear plan all along: to reduce the size of the state over a ten year period, using the deficit as cover.
Instead, might it be that Mr Osborne doesn't have a hidden agenda? That jump in spending is consistent with what he says he believes - that cutting spending will no longer be necessary by 2020 because the deficit will have been eliminated: he foresees a surplus on PSNB of £5.2bn in 2018-19.
I have four reasons for suggesting this:
1. If he's so keen to avoid that "back to the 30s" jibe, why did he give Labour the chance to use it back in December? Could it be that, back then, he didn't have the projected benefits of asset sales and lower debt interest costs and so felt the need to cut the deficit through spending cuts?
2. If he sincerely believes, as genuine small staters do, that governments can do more with less, why not say so and not bother projecting a big rise in spending in 2020? Could it be that he's forecasting it because he fears small government is unsustainable?
3. Much of his speech yesterday was not that of a small-state free marketeer. His talk of building a "northern powerhouse" and supporting "insurgent industries" had more in common with Harold Wilson's "white heat of technology" (pdf) than Friedrich Hayek.
4. He has not prepared the political ground for a permanently smaller state. For example, he's not especially encouraged economic research on the merits of small government, nor promoted studies of how (say) South Korea delivers decent public services at low cost, nor has he obviously encouraged those who want entire government departments shut down.
What I'm suggesting here is something radical. Maybe we should take Mr Osborne at face value. Perhaps there's less to him than meets the eye and he really does believe the guff about the necessity of austerity.