At lunchtime, the press headed off to hear the referee’s verdict on the Budget. The Institute for Fiscal Studies is now so respected that its view of the Budget largely determines the news agenda. Its briefings are now so popular that they can no longer be held in their basement. So, journalists, economists and accountants piled into a room at the University of London Union which is normally used for battle of the bands contests rather than Budget analysis.
The most striking number the IFS presented was that if Labour ringfences the already protected areas of spending for the whole parliament, other departmental budgets will have to be cut by more than 25 percent. One dreads to think what the consequences of slicing a quarter off the defence Budget would be. It is also hard to imagine that a government really could take a quarter off, say, the transport or universities budget. If Labour does get back in, I expect they would end up having to dramatically jack up taxes to meet their target for reducing the deficit, the amount by which the government spends more than it receives in revenue. It is also worth noting that even in 2014-15, a Labour government would still be spending £82bn a year more than it was receiving in revenue.
Debt interest payments are going to rise by 12.7 percent a year every year. The IFS is also right to point out what a scandal it is that the Treasury refuses to cost its policy of ringfencing the NHS, schools and sure-start. As the policy was announced in the PBR, there’s absolutely no defence for it not being costed in the Budget. They are simply refusing to do so because they want to keep the facts from the public, the people who pay for government spending.
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