Chancellor will have £2bn underspend to play with

1 Feb 01
Chancellor Gordon Brown could be sitting on an even bigger budget surplus than anticipated because government departments are not spending their allocations, according to the Institute for Fiscal Studies.

02 February 2001

The think-tank predicts that Whitehall departments will have underspent to the tune of £2bn by the end of the financial year, based on current spending patterns.

This figure includes around £1bn that has been earmarked for capital projects but remains untouched. It will be the fourth consecutive year that ministries have failed to spend their full budgets.

Carl Emmerson, senior research economist at the IFS, said recent changes allowing departments to carry over any unspent funds to the next year would see the trend continue.

'Under this system, there has got to be a worry that the entitlements could get very large,' he said. 'There may be concerns that surpluses can't be allowed to continue over a long period of time.'

The IFS also predicted that the chancellor would continue to enjoy growing surpluses, giving him the option of increasing public spending without having to raise taxes.


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