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IFS: Darling not clear on where cuts will be made

GOVERNMENT departments will be faced with swingeing cuts to their budgets over the next four years as the Treasury tries to plug the £51bn black hole in the country’s public finances, the Institute for Fiscal Studies (IFS) warned yesterday

The think-tank slated the government for not providing the necessary detail on how it would repair the fiscal damage over the next seven years.

The IFS’s director, Robert Chote, said: “There are an awful lot of judgements still to be made, or revealed, notably with regards public spending over the next parliament.” The Tories did not escape unscathed either, with Chote adding: “This greater-than-necessary vagueness allows the opposition to be vaguer than necessary too.”

Although Darling reduced the size of the fiscal repair job to £66bn in Wednesday’s Budget – £6bn less than he had estimated in the pre-Budget report – 30 per cent of this has yet to be announced.

The think-tank also warned yesterday that the Treasury will have to make £46bn a year – or a cumulative 25.4 per cent by 2014-15 – of real cuts to public services spending to meet the Budget’s forecasts.

If frontline spending on the NHS and schools were to remain protected after 2012-13, these cuts would fall entirely on unprotected departments such as housing and transport.

The current plans, which only offer protection to the NHS and schools until 2012-13, would still require a cumulative 14 per cent real cut in unprotected departmental budgets.

The IFS’s Carl Emmerson, said: “This next spending settlement is set to be very tight for areas such as higher education, transport and housing.”

The Treasury expects that as much as £11bn will be found in efficiency savings by 2012-13, helping to reduce the size of the deficit.

But Emmerson pointed out that the government had only managed to achieve 30 per cent of the savings it committed to find between 2008-11. He said it was unclear whether efficiency savings would contribute to deficit reduction.

Politicians also hit out at Darling’s lack of clarity.
Liberal Democrat leader Nick Clegg said. “The chancellor is incapable of coming clean about where spending cuts will have to fall.”