Budget 2013: Treasury is massaging figures and relying on underspend

Peter Spence
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Following news from the Institute for Fiscal Studies that government will have to find £23bn after 2015, some further developments from their findings:

The government is using "exceptional inter-period flexibility" to shave £1.6bn off its 2012/13 spending and adding £0.8bn to following years. This allows the Treasury to massage its figures by delaying paying its bills until the next time period.

Meanwhile the Treasury is putting departments under immense pressure to underspend. Earlier we said that the NHS underspent by £2.2bn last year (or by about two per cent of its budget). Total underspend was £10.9bn in 2012/13, £6.4bn in 2011/2012 and £4.3bn in 2010/2011. As many departments are ringfenced, underspending is key to George Osborne meeting his spending targets.

While overall spending cuts are small, as ringfenced departments are still growing, unprotected areas of government could face cuts of up to 26 per cent. Since the August 2012 Autumn Statement a large gap in finances has opened up, yet the chancellor has done nothing to resolve this.

(Source: IFS)