DCLG cuts are the first of many, economists warn

27 May 10
Spending cuts to the Department for Communities and Local Government are only the first step on a very long journey, according to the Institute for Fiscal Studies.
By David Williams

27 May 2010

Spending cuts to the Department for Communities and Local Government are only the first step on a very long journey, according to the Institute for Fiscal Studies.

The comments, from deputy director Carl Emmerson, were in response to ministers’ announcement of cuts worth £6.2bn across the public sector during 2010/11.

These include an overall £1.185bn cut to communities and local government spending, with £780m targeted at communities budgets not overseen by councils.

The block grant for local authorities will remain untouched this year.

According to the IFS, the overall amount spent on councils is to drop by 1.2% this year compared with 2009/10. Meanwhile communities spending will fall by 27.4% from 2009/10 levels.

The sharp reduction is because the previous year’s figure was inflated as the last administration brought forward some 2010/11 funding in an attempt to stimulate the economy. But the new cut is still more than the 23% planned by Labour.

As a sweetener for councils, the cuts were accompanied by a pledge to remove ring-fences from £1.7bn of local authority funding.

Emmerson told Public Finance that this initial round of cuts could give some indication of what to expect from the June 22 Budget and this autumn’s Comprehensive Spending Review.

‘They have not cut schools or defence this year, and overseas aid is going to rise,’ he said. ‘That shows a preference – so maybe the cuts will be higher elsewhere.

‘For all departments this is a big step – but it’s a big step on a very long journey and there’s still a long way to go.

He added that future cuts would be ‘very much more painful,’ and predicted that local government grants would be hit hard.

Other cuts announced by Chancellor George Osborne on May 24 included £863m from the business department and £535 from work and pensions.

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