No easy options in next year's Spending Review

The trade-offs between the pace of deficit reduction, cuts to welfare, cuts to departmental budgets and increases in taxes are exposed in calculations for the next Spending Review published by the think tank IPPR today.

The Government is due to undertake a Spending Review next year that will cover the final year of this Parliament and the first two years after the planned 2015 General Election. IPPR's calculations are based on analysis of documents published by the Treasury and the Office for Budget Responsibility earlier this year and reveal that there are no easy options for any of the three main political parties, if they are to produce credible manifestos for the next election.

Nick Pearce, IPPR Director, said:

"There are no easy options for politicians in the next Spending Review because of the weakness of the economy and the fragility of the nation's public finances. The economy needs stimulus for growth now, but fiscal consolidation in the next Parliament. That makes some combination of spending cuts and tax rises inevitable. Realistic and credible fiscal plans will have to go beyond small or symbolic measures that do not match the scale of the task.

"At the moment, the Chancellor has started a debate about how to cut £10bn from the welfare budget, in order to protect departmental budgets from deeper cuts. But this is not the only option available to him. Politics is about difficult choices but there are a range of different options that should be debated honestly during this party conference season and well into next year."

Notes to editors:

IPPR's new presentation illustrating the different choices and trade-offs in the next Spending Review is available from:bit.ly/tough-choices

IPPR's new report - Pressures and priorities: the long-term outlook for Britain's public finances - is available to download from http://bit.ly/IPPR9633

IPPR's report - A path back to growth - is available from: http://ippr.org/publication/55/9438/a-path-back-to-growth

Contact:

Richard Darlington, 07525 481 602, r.darlington@ippr.org