Lib Dem business secretary Vince Cable and former Tory cabinet minister Liam Fox both suggested that the government’s pledge to guarantee budgets in some areas – such as the NHS, schools and international aid – was limiting the government’s ability to make sensible spending decisions.
Fox told an audience at the Institute of Economic Affairs that it was time to end the policy of ringfencing and freeze public spending for three years, while Cable said the policy led to an “unbalanced approach to public spending” as other departments were hit disproportionately.
However, Prime Minister David Cameron told an audience in Milton Keynes that he would not sway from his pre-election pledge to maintain the NHS budget.
But a report out this morning from the independent think tank Reform says George Osborne is working with “one hand tied behind his back” as he cannot make cuts to departments that account for more than two-fifths of total government spending.
“By ringfencing budgets, the government has created a perception of underfunding while leaving the real drivers of spending unaddressed,” the think tank says.