By Tash Shifrin
17 September 2009
Leaked government figures reveal that Treasury officials planned the ‘tightest squeeze’ on public services spending since Britain was bailed out by the International Monetary Fund in the 1970s, economists have said.
The analysis by the Institute of Fiscal Studies of leaked Treasury projections for the years to 2013/14 was released as local government leaders warned that £300m of stealth cuts have been made by ministers in the five months since the 2009 Budget.
The cuts had been made in ‘a series of announcements from different departments about reductions in specific grants to councils’, papers drawn up for the Local Government Association’s September 17 meeting said.
The piecemeal cuts ‘risk undermining the spirit’ of the government’s Budget pledge to maintain the current three-year settlement with local authorities into its last year, the documents added.
It was ‘not acceptable for cuts to be imposed in a seemingly ad hoc manner, without consultation or understanding of the cumulative impact on local government or local people’.
The Treasury figures leaked to the Conservative Party – and released on September 16 – reveal that future cuts to Whitehall spending would be more severe than economists had predicted on the basis of the published Budget information. They were drawn up by officials in April, immediately before the Budget, but were not released.
They show the Treasury’s projections for debt interest payments and other non-departmental spending in the years between 2011/12 and 2013/14, when interest on the public sector debt is set to hit £63.7bn.
The IFS had previously estimated that the 0.7% growth in current spending planned in the Budget would lead to a 2.3% real-terms cut in departmental budgets from 2011 – but it had based its figures on its own assessment of likely debt and other non-departmental spending costs as these were not published in the Budget.
Gemma Tetlow, senior research economist at the IFS, told Public Finance: ‘Faster growth in annual managed expenditure – in debt interest payments and some other elements... implies a much tighter squeeze on departments than we had thought.’
The IFS calculated that the newly revealed figures mean cuts of 2.9% a year in real terms or 8.6% in total over three years. It said: ‘This would be the tightest squeeze in spending on public services since the UK was negotiating its spending plans with the International Monetary Fund in the late 1970s.’
Tetlow added that this scale of squeeze over the three years to 2013/14 – aimed at filling around half the government’s £90bn fiscal hole – would ‘take departmental spending as a share of gross domestic product back to the levels of 2002’.
If public spending cuts were used to make up half the continuing fiscal tightening after 2013/14, this ‘would take departmental spending down to the level of 1998’.
The Conservatives paraded their leaked figures with glee, arguing that the cumulative Whitehall spending cut over four years from 2010 to 2014 amounted to 9.3% – very close to the 10% cuts figure with which the government had tried to tag the Tories.
Conservative leader David Cameron taunted the prime minister, who had refused to admit the government would make spending cuts until his September 15 address to the Trades Union Congress.
‘The documents... show that Gordon Brown was denying something that his own civil servants were telling him was true. In these confidential Treasury documents, written just five months ago, the government set out plans to cut spending on public services over the next four years, from 2010 to 2014,’ Cameron said.
‘They’re not wrong to be planning cuts, they’re wrong to try and cover up their plans for cuts,’ he added.
The Tories’ coup was delivered just after Brown finally conceded to union leaders that Labour would ‘cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets’.
In a nod to the Pre-Budget Report expected in November, Brown added: ‘But when our plans are published in the coming months people will see that Labour will not support cuts in the vital frontline services.’
17 September 2009
Leaked government figures reveal that Treasury officials planned the ‘tightest squeeze’ on public services spending since Britain was bailed out by the International Monetary Fund in the 1970s, economists have said.
The analysis by the Institute of Fiscal Studies of leaked Treasury projections for the years to 2013/14 was released as local government leaders warned that £300m of stealth cuts have been made by ministers in the five months since the 2009 Budget.
The cuts had been made in ‘a series of announcements from different departments about reductions in specific grants to councils’, papers drawn up for the Local Government Association’s September 17 meeting said.
The piecemeal cuts ‘risk undermining the spirit’ of the government’s Budget pledge to maintain the current three-year settlement with local authorities into its last year, the documents added.
It was ‘not acceptable for cuts to be imposed in a seemingly ad hoc manner, without consultation or understanding of the cumulative impact on local government or local people’.
The Treasury figures leaked to the Conservative Party – and released on September 16 – reveal that future cuts to Whitehall spending would be more severe than economists had predicted on the basis of the published Budget information. They were drawn up by officials in April, immediately before the Budget, but were not released.
They show the Treasury’s projections for debt interest payments and other non-departmental spending in the years between 2011/12 and 2013/14, when interest on the public sector debt is set to hit £63.7bn.
The IFS had previously estimated that the 0.7% growth in current spending planned in the Budget would lead to a 2.3% real-terms cut in departmental budgets from 2011 – but it had based its figures on its own assessment of likely debt and other non-departmental spending costs as these were not published in the Budget.
Gemma Tetlow, senior research economist at the IFS, told Public Finance: ‘Faster growth in annual managed expenditure – in debt interest payments and some other elements... implies a much tighter squeeze on departments than we had thought.’
The IFS calculated that the newly revealed figures mean cuts of 2.9% a year in real terms or 8.6% in total over three years. It said: ‘This would be the tightest squeeze in spending on public services since the UK was negotiating its spending plans with the International Monetary Fund in the late 1970s.’
Tetlow added that this scale of squeeze over the three years to 2013/14 – aimed at filling around half the government’s £90bn fiscal hole – would ‘take departmental spending as a share of gross domestic product back to the levels of 2002’.
If public spending cuts were used to make up half the continuing fiscal tightening after 2013/14, this ‘would take departmental spending down to the level of 1998’.
The Conservatives paraded their leaked figures with glee, arguing that the cumulative Whitehall spending cut over four years from 2010 to 2014 amounted to 9.3% – very close to the 10% cuts figure with which the government had tried to tag the Tories.
Conservative leader David Cameron taunted the prime minister, who had refused to admit the government would make spending cuts until his September 15 address to the Trades Union Congress.
‘The documents... show that Gordon Brown was denying something that his own civil servants were telling him was true. In these confidential Treasury documents, written just five months ago, the government set out plans to cut spending on public services over the next four years, from 2010 to 2014,’ Cameron said.
‘They’re not wrong to be planning cuts, they’re wrong to try and cover up their plans for cuts,’ he added.
The Tories’ coup was delivered just after Brown finally conceded to union leaders that Labour would ‘cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets’.
In a nod to the Pre-Budget Report expected in November, Brown added: ‘But when our plans are published in the coming months people will see that Labour will not support cuts in the vital frontline services.’
