Just got back from the Institute for Fiscal Studies’ annual post-budget briefing. Scary stuff. They reckon that once expenditure the government can’t cut is factored into the Chancellor’s 0.7% real terms growth figure for 2011-12 onwards, departments such as health, education and the police will be left with real terms cuts of 2.3% a year.
Debt interest payments will need to increase by 8.4% a year. That alone cuts the 0.7% increase down to a 0.6% decrease for the rest of public spending.
But then there’s social security spending on things like unemployment benefit, which will rise during the recession by around 1.7%. That takes the rest down to a 1.6% real terms cut a year.
Then there’s a bunch of other non-department spending which seems pretty immoveable, which the IFS reckons will continue to grow by around 1.9%, leaving the rest of public spending with 2.3% real terms cuts a year.
Public spending hasn’t been so tight since the end of the 1970s, Tetlow says.