Delivering on the government’s post-election spending plans would require substantial cuts to local authority services, the Institute for Fiscal Studies has said.
Cutting unprotected services – including councils, courts, further education colleges and prisons – would have to be done at “around half the pace that George Osborne did between 2010 and 2015”, Paul Johnson, director of IFS, said.
The rate of cuts would be around 3.3% per year, according to the IFS, which compares with cuts of 6.1% per year to those areas between 2009–10 and 2014–15, and increases of 5.2% per year over this parliament.
Reacting to the Spring Budget, Johnson commented: “The chancellor is still on track to stabilise debt as a fraction of national income in five years’ time, just about, but only on the basis of a pie-in-the-sky promise to increase fuel duties (this time we mean it – promise!) and a set of post-election spending plans that still imply substantial cuts to funding of many public services which are clearly struggling with their current level of funding.”
Johnson noted that while chancellor Jeremy Hunt’s ambition to improve public sector efficiency and productivity “is the right one”, delivering on these plans and securing cash savings across the public sector “will be very tough indeed”, with capital funding not arriving until 2025–26 in any case.
“We should at least be grateful that Mr Hunt didn’t pencil in even larger cuts to as-yet-unspecified public services,” he added.
Although cutting unprotected services at the rate required might be within the “realms of possibility”, Johnson explained, “there will be far less in the way of low-hanging fruit this time around, and banking on big improvements in public sector productivity is a risky business”.
He concluded: “Whoever is chancellor at the time of the next Spending Review – which the chancellor confirmed will not take place until after the election – might wish they’d chosen a different line of work.”
Room151’s overview of the Spring Budget and reaction from the local government sector can be read here, while a report on the Budget’s impact on the LGPS can be read here.
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