Treasury may drop budget protections for many areas

New analysis by IPPR, the progressive policy think tank shows that the Treasury may be preparing to drop budget protections for many areas.

The government’s four core protections were always the budgets for schools, the NHS, defence and international aid. At the spending review in 2015, the Treasury extended the list of protected budgets dramatically (which IPPR and others welcomed at the time). They added the following to the list above, all with different degrees of protection:

• 16-19 education
• Early years
• Adult skills
• Science
• Police
• Foreign office

The Treasury announced in the Budget 2016 that it needed to find £3.5 billion in savings from departmental budgets in 2019/20, and earlier this week the government quietly announced further details of this review which asked departments to plan for 3 to 6 per cent savings.

IPPR has analysed these figures through our public spending model – we have found that trying to find the £3.5 billion from budgets outside of the full longer long list of protected areas, requires an average cut of at least 6.5 per cent – which is more than the 3 to 6 per cent that departments have been told to plan for (see chart below).

The efficiency review only mentions the four original protections above. This implies that the government will have to reverse some of the protections they announced in November 2015 if they are to hit the £3.5 billion target.

It is possible that movements in the economic forecast since the 2015 spending review – which was conducted pre-referendum – mean not all of the above protections are at risk, as some of the four core budget protections are pegged to the economic outlook. But given the size of the savings required, we judge this to be unlikely.

Alfie Stirling, IPPR senior economic analyst, said:

“The Chancellor is abandoning crucial budget protections on the sly. Earlier this week Whitehall announced that departments were being told to model cuts of between three and six per cent, in order to save £3.5 billion. But IPPR modelling has shown that this is unlikely to be achieved without raiding budgets that are currently protected.

“In order for the Chancellor to meet his own target, he must now look to cut money that his predecessor had previously promised to protect only 15 months ago. Budgets like adult skills could face a black hole of between £100 to £200 million, while the police budget could now face a further £250 to £500 million in cuts that the public were not aware of.”

Ends

Contact:

Becky Malone 07585 772633 r.malone@ippr.org

Editor’s Note:

IPPR aims to influence policy in the present and reinvent progressive politics in the future, and is dedicated to the better country that Britain can be through progressive policy and politics. With nearly 60 staff across four offices throughout the UK, IPPR is Britain’s only national think tank with a truly national presence.

Our independent research is wide ranging, it covers the economy, work, skills, transport, democracy, the environment, education, energy, migration and healthcare among many other areas. ippr.org