IFS: there could be deeper cuts to come

An unfamiliar mood before the Institute for Fiscal Studies’ Budget briefing today: many of the gathered journalists, economists and policymakers had decided that, for once, this wouldn’t be an exercise in spotting the Chancellor’s deceptions, because, quite simply, there aren’t many. And they could well be right. In his introductory remarks, Robert Chote, the director of the IFS, said that “the government is certainly to be congratulated for the transparency with which it presented [yesterday’s policy announcements].”

What we’ve heard, so far, backs up that tribute. There will be an extra £50 billion of fiscal tightening by 2015; there is a 77-23 split between spending cuts and tax rises; and unprotected departments face cuts of 25 percent – all as George Osborne said yesterday. What a refreshing change to the Brown years, when the IFS had to locate spending cuts in the footnotes to footnotes.

One noteworthy point, though, is that unprotected departments could face even deeper cuts. If – as the IFS’s Rowenna Crawford put it – the spending review sets out ringfenced health spending, 10 percent cuts for schools and defence, and no more cuts on welfare and pensions, then the cuts for unprotected departments could be a hefty 33 percent.  

But, as George Osborne suggested this morning, further welfare cuts could restrict this number. An extra £13 billion of welfare cuts would bring it down to 20 percent, for instance.

Anyway, the second half of the briefing is kicking off shortly. I will report back if anything else grabs me.