£19 billion of cuts to unprotected departmental spending – from Justice to Local Government – [are] pencilled in for after the [20214] election
As we approach the election, it is clear that we will be hearing a lot about how both main parties would manage the public finances. Both want to avoid looking like they have unfunded spending – or tax-cutting – plans. But recent policy changes and economic shocks have left us with a larger state, rising taxes and ever-higher debt, a difficult combination for whichever party wins the next election. At the Budget, the headroom against the Government’s self-imposed fiscal rule of reducing public debt by the fifth year of the forecast was wafer thin at just £9 billion. And this was predicated on spending plans that imply difficult-to-deliver cuts to unprotected departments. To make matters worse, since the Budget, new demands on the public finances have come to light, interest rate expectations have risen, and the macroeconomic outlook may yet worsen. This could easily leave the next Government over £30 billion away from getting debt falling, the stated aim of both main parties. In short, history and politics has left the fiscal debate detached from this reality