Unprotected departments face cuts of 27%, says the IFS

Institute for Fiscal Studies gives its assessment ahead of the Spending Review – and warns easier efficiency savings have already been "identified and delivered"

By Josh May

02 Oct 2015

Unprotected government departments will face cuts to their budgets of approximately 27% by 2020, according to analysis from the Institute for Fiscal Studies.

A paper written ahead of November's Spending Review said that George Osborne’s plan to eliminate the deficit by the end of the decade meant overall departmental spending cuts of 3.2%, or £11.3bn, in real terms by 2020.

Once block grants to devolved administrations, pledges to increase spending on the NHS, Ministry of Defence and international aid, and increases in capital spending are taken into account, the total that unprotected Whitehall departments need to cut rises to £23.7bn, 18.8% of their budgets.

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Looking at day-to-day spending over the course of the decade, the IFS says “the total real cut... would reach around 50%”.

George Osborne has asked departments to model two scenarios ahead of the spending review: one for a budget cut of 25%, and one for a budget cut of 40%.  

The IFS says the spending cuts to come will be more difficult to implement while protecting frontline services than in the last parliament.

“A key question remains about whether or not spending cuts of this magnitude, on top of those delivered over the last parliament, are achievable,” the paper says.

“On the one hand, the coalition government demonstrated the ability to hold down spending, with many departments actually underspending their allocated budgets over the last parliament. 

"On the other hand, further spending cuts (particularly with many of the same departments potentially seeing the biggest cuts again) will get harder as presumably easy efficiency savings have been identified and delivered, while demand and wage pressures continue to increase.”

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