New spending commitments mean some areas will feel all the impact of the cuts
The first Budget of the new parliament will be announced in just over a month. As George Osborne prepares to deliver his spending plans, the public will be bracing themselves for more big cuts.
Today the Institute for Government (IG) and the Institute for Fiscal Studies (IFS) collaborated to offer a background briefing on what to expect from the chancellor, based on stated plans for the deficit and public service spending.
It’s not good news.
Writing on the IFS website, deputy director Carl Emmerson warned that the ‘easiest’ cuts have already been made, and that we can now expect a deeper and harsher austerity made up of unevenly spread cuts.
The Conservative manifesto commits to cutting total public spending in real terms by 1 per cent a year in 2016–17 and 2017–18. Emmerson points out that for all the chancellor’s confidence, this will actually be very difficult to meet and have a disproportionate impact on some departments because ‘underlying pressures’ mean spending in others has to be increased.
For example, spending on public service pensions is forecast to rise as the numbers receiving such pensions grows. Then there are the new spending commitments that have been announced since the election: the extension of free childcare (costed by the Conservatives at £350 million), the tax-free childcare scheme (£0.8 billion), the removal of the cap on higher education student numbers (£0.7 billion) and the Dilnot social care funding reforms (£1.0 billion).
These promises are at best ill-thought through and at worst excuses for further erosion of the welfare state; we do know there will be £12bn worth of cuts in social care spending over two years.
As the IFS has pointed out before, making this saving without touching child benefit (which the Conservatives promised this week that they wouldn’t do) will require cuts to one or more of tax credits, housing benefit and disability & incapacity benefits.
Emmerson writes today that if the government is to meet its overall spending target, even this £12 billion would not be enough to halt an acceleration of cuts in other areas. Cuts would need to increase from 2.0 per cent a year, as over the five years from 2010-2-15, to 2.2 per cent a year over the three years.
This would give a total cut of £23.8 billion across all departments between 2015–16 and 2018–19. That’s added to the £2.2 billion of cuts taking place in 2015–16 and the £49.2 billion of cuts that were delivered between 2009–10 and 2014–15.
The ringfencing of certain budgets – schools, for example – leaves others vulnerable to cuts. Current unprotected areas include spending by the Ministry of Defence, the Home Office, the Ministry of Justice, the Department for Communities and Local Government, the Department for Business, Innovation & Skills, and the Department for Transport.
Emmerson concludes that the government’s spending plans ‘may turn out to be deliverable’, but he says the end picture will not be quite as the Conservatives described it:
“They certainly will not feel like is just 1 per cent being taken out of each area of spending, nor will it require merely ‘£13 billion from departmental savings’ as the Conservative manifesto described.
“While not inaccurate, these numbers give a misleading impression of what departmental spending in many areas will look like if the manifesto commitment to eliminate the deficit by 2018–19, largely through spending cuts, while not cutting spending in many areas, is to be met.”
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter
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