Events | 2010.03.25
Budget 2010: IFS warns transport and housing spending has to be cut
The think tank claims government expenditure on infrastructure projects must be slashed otherwise health and education will suffer
The government will need to cut spending on areas like transport and housing by 25% over the next five years to preserve spending on health and education, a leading think tank has said.
A Tory administration will need to cut spending even further to reach its deficit reduction targets, said the widely respected Institute for Fiscal Studies in its post-budget report which warns Britain will struggle to cope with the after effects of the financial crisis and a borrowing binge that has left it one of the world\'s most indebted countries.
The IFS said that under plans spelled out by the chancellor Alistair Darling to protect spending on health, education and international aid, steep cuts will be needed in all other areas of the public sector to meet overall cost savings of 11.9%.
If a promise to preserve spending on these three key areas is kept for the life of the next parliament, unprecedented cuts can be expected in road building, house building, defence and the home office.
Infrastructure projects and other capital intensive schemes are likely to be shelved to meet the deficit reduction targets. Thousands of public sector workers will also lose their jobs as public spending dives from around 27% of national income back to its 1997 level of 20%.
Estimates by the IFS show that Tory cuts will be at least £8bn more than Labour\'s to meet its own targets, adding to the pain faced by many government departments.
IFS director Robert Chote warned that many of the calculations used by the Treasury to justify its figures were vague and open to doubt.
He said growth figures next year of 3% to 3.5% were higher than many economists predicted. He added that the £46bn of real cuts in public services spending he believed would be necessary by 2014/15 should be separate from the £20bn of efficiency savings Whitehall departments were already committed to making over the next four years.
"If they are cutting out genuine waste we would expect the government to try to achieve most of these efficiencies even if it was not having to cut public spending overall," he said.
"Efficiency savings that can and should be delivered in any event do not narrow the gap between the quality and quantity of public services that we would enjoy with spending cuts and without hem. They are not free money and they do not mean that spending cuts are painless."
For more information, please visit
http://www.guardian.co.uk/uk/2010/mar/25/budget-economicgrowth
