Unprotected departments face cuts of up to 2.9% under Labour's plan – IFS

Institute for Fiscal Studies director warns Labour's plans offer no explanation of how party would deliver the “genuine change” it is calling for
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By Tevye Markson

13 Jun 2024

Unprotected departments face real-terms cuts of up to 2.9% under Labour, the Institute for Fiscal Studies has estimated.

The think tank set out the likely impact of the party’s manifesto on departments’ budgets were it to win power at next month’s election.

It said ‘unprotected’ areas could face real-terms cuts of between 1.2% and 2.9%, and need a top-up of between £6-16bn by 2028–29 to be avoided.

This compares to the 1.9% and 3.5% each year and £10-20bn cuts that the IFS has previously estimated under the current government’s plan outlined at the Spring Budget. The think tank has also said the Conservative Party’s manifesto commitments published this week to cut the civil service headcount, reduce consultancy spending, and find “quango efficiencies” would come on top of this.

IFS director Paul Johnson said Labour has joined the Conservatives and the Lib Dems in a “conspiracy of silence on the difficulties they would face” by using top-ups of around £5bn to mostly pay for additional promises for the NHS and schools rather than reducing cuts for unprotected public services.

“These challenges are already perfectly clear,” he said. “The books are open. A post-election routine of shock-and-horror at the state of the public finances will not cut it.”

On the other hand, Johnson said the party’s focus on economic growth and stability “is, in this context, welcome”. But he warned that growth “would take time to arrive, and its scale is uncertain”. “The difficult choices for the coming Parliament will still be there,” he added.

Johnson also warned the spending increases and tax rises in Labour’s manifesto are “trivial” and do not explain how the “genuine change” the manifesto argues for would be funded.

He said the party had diagnosed “deep-seated problems” across child poverty, homelessness, higher education funding, adult social care, local government finances, pensions “and much more besides”.

But he said the manifesto contains “almost nothing in the way of definite promises on spending” apart from its “green prosperity plan”, which “comes in at no more than £5bn a year”.

He also pointed out that the manifesto makes “big promises” on the NHS “which will require big spending” and yet Labour’s commitments – which include having debt falling within five years, and not increasing rates of income tax, National Insurance, VAT and corporation tax – “leaves literally no room" for any more spending on the NHS than that planned by the current government.

Johnson said the manifesto also “promises a dizzying number of reviews and strategies to tackle some of the challenges facing the country”.

“That is better than a shopping list of half-baked policy announcements,” he said.

But he added: “Delivering genuine change will almost certainly also require putting actual resources on the table. And Labour’s manifesto offers no indication that there is a plan for where the money would come from to finance this.”

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