Spending cuts warning to Chancellor


George Osborne

The Government will have to step up the pace of spending cuts significantly after 2015/16 if it is to meet targets for reducing the state deficit, according to new analysis by the Resolution Foundation think-tank.

The think-tank found that delivering current plans would require £10 billion in new tax rises or welfare cuts after 2015 just to maintain the pace of cuts to Whitehall departmental spending.

If the Chancellor wanted to avoid raising taxes or slashing benefits, he would have to speed up the pace of cuts in Whitehall, imposing a reduction of 64% in the budget of the Foreign Office between 2010 and 2018, as well as reductions of 46% at the Home Office and 38% at the Ministry of Defence over the same period, said researcher Matthew Whittaker.

The analysis comes days ahead of George Osborne's June 26 spending review for 2015/16, when the Chancellor is looking for £11.5 billion of spending cuts in Government departments in the year after the next general election.
Mr Whittaker said the spending review would leave overall expenditure "relatively flat" that year, setting the scene for "increasingly stark" belt-tightening for the review expected after the 2015 election to cover the years 2016 to 2018.

The Resolution Foundation analysis showed how the protection from cuts offered to the NHS has shifted the balance of Government spending since the election, with the share of overall departmental budgets which goes to health projected to rise from one quarter to one third by 2018.

And the report found that, on the current path, the amount of welfare spent per working-age household will fall by 15% between 2010 and 2018, while the amount spent per pensioner household grows by 6%.

© 2013 Press Association