By Richard Johnstone | 21 March 2014
The government is still to make clear how it will implement planned cuts to public spending, the Institute for Fiscal Studies said in its analysis of the Budget.
In an examination of Chancellor George Osborne’s spending plans, the think-tank concluded the overall bottom line of the public finances was little changed over the Budget’s forecast period to 2018/19.
However, the chancellor announced some permanent tax cuts – such as a further £500 increase in the tax-free personal allowance and a range of private pension reforms – that were paid for by unspecified spending cuts, it stated. The extra cuts included the decision to make reductions to departmental budgets, first announced last December following underspends, permanent.
This means that the long-run projection for the public finances was weakened, IFS director Paul Johnson said.
‘A set of definite and permanent tax cuts look to have been matched by more unspecified spending cuts, some changes in the timing of tax receipts, and our old friend tax avoidance measures.
‘The numbers are small in the scheme of things. But we had similar observations to make after last year’s Budget. A chancellor focused on the sound management of the public finances over the long run would not make a habit of repeating these sorts of manoeuvres.’
He added the fact Osborne had penciled in further reductions, when more than half of the 19.8% cuts to public spending planned between 2010/11 and 2018/19 are still to be implemented, showed he was confident they could be made. The cuts rise to 35.6% for some government departments when protected spending areas such as schools and the NHS are excluded, he added.
‘The overwhelming fact about the public finance plans remains that spending in unprotected departments is set to have fallen by more than a third by 2018/19, with most of those cuts still to come.
‘That didn’t change significantly yesterday. Further public service spending cuts appearing in the Budget scorecard appear to have offset some potential additional room for manoeuvre left by reductions in forecast debt interest and annually managed expenditure spending. The chancellor effectively expressed a lot of confidence in his ability to deliver these cuts. He did not take the opportunity to ameliorate them.’
However, the Budget ‘leaves us with as little sense as we had before of quite how the very large public spending cuts still in the pipeline will actually be delivered’, Johnson concluded.
