CHANCELLOR George Osborne only managed to edge the deficit down by pushing planned spending into future years, the Institute for Fiscal Studies (IFS) said yesterday.
The government cut £1.6bn from its 2012-13 budget by use of “exceptional inter-period flexibility” the IFS said – simply delaying spending and saving it until 2013-14 and 2014-15.
The news comes despite Osborne’s June 2010 promise that with the establishment of the Office for Budget Responsibility (OBR) as a fiscal watchdog: “From now on we will have to fix the budget to fit the figures, instead of fixing the figures to fit the budget.”
The OBR’s own analysis, published on Wednesday, revealed: “at least £1.6bn of the further shortfall in departments’ February forecasts is the direct result of the government’s actions to reduce spending in 2012-13 by pushing money forward into future years.”
Yet the Treasury also managed to get governmental departments to achieve £9.3bn of genuine underspends. These cuts were crucial to bringing the deficit down £0.1bn from £121bn in 2011-12 to a projected £120.9bn in the current financial year.
Borrowing will be £1bn higher this year than planned in the Autumn Statement, £8bn higher next year, £9bn higher in 2014-15, £15bn higher in 2015-16 and £11bn higher in 2016-17.
The IFS also confirmed that the UK will face £23bn of spending cuts or tax rises after the 2015 election.