Laura Sharman 21 July 2021

Chancellor facing 'difficult' spending review

Chancellor facing difficult spending review image

Public services could face a £17bn funding cut in the spending review, the Institute for Fiscal Studies (IFS) has warned.

The IFS said that the chancellor's existing spending plans would mean up to £17bn less was spent on public services per year than was planned pre-COVID.

The economists warned Rishi Sunak has 'very little room for manoeuvre' in his forthcoming spending review due to permanent economic damage done by the pandemic and rising debt interest costs.

However, the Office for Budget Responsibility (OBR) has estimated that the NHS, schools and public transport require around £10bn of additional spending per year for the best three years due to virus-related pressures.

The report said that the chancellor could afford a sizeable short-term giveaway while staying within the path for borrowing set out in the March Budget, but there is no space for permanent giveaways.

Isabel Stockton, a research economist at IFS and an author of the research, said: ‘Stronger economic growth and, with it, stronger receipts will be welcome news to the Chancellor. But in the near term, borrowing remains very high, and the extent to which lower borrowing this year will translate into lower borrowing further forwards is highly uncertain. Indeed, our forecasts suggest the Chancellor has almost no additional wiggle room for permanent spending giveaways if he is to remain on course to deliver current budget balance.

'This suggests a very difficult Spending Review. Any additional spending to meet the demands and cost pressures from COVID, or to meet pre-existing spending demands such as for social care, would potentially require spending cuts elsewhere or further increases in tax.'

Photo: flickr / Ministry of Housing, Communities and Local Government

SIGN UP
For your free daily news bulletin
Highways jobs

Youth & Community Based Commissioner

Essex County Council
£19308 - £19631 per annum
Youth & Community Based Commissioner Permanent, Part Time £19,308 to £19,631 per annum (FTE) Location
Recuriter: Essex County Council

Social Worker - Family Support & Protection Team

Essex County Council
Up to £207 per day + Umbrella
Family Operations delivers direct provision of services relating to vulnerable children, young people and complex families. These services will be del England, Essex, Harlow
Recuriter: Essex County Council

District Youth and Community Commissioner in Training

Essex County Council
£25313 - £28001 per annum
District Youth and Community Commissioner in Training Permanent, Full Time £25,313 - £28,001 Per Annum Location
Recuriter: Essex County Council

Social Worker - Early Intervention Team

Essex County Council
Up to £207 per day + Umbrella
*** This is a temporary position to start as soon as possible based at Colchester Hospital ***About the RoleWorking to support adults, and their famil England, Essex, Colchester
Recuriter: Essex County Council

Adults Social Workers - Harlow

Essex County Council
£32065 - £43839 per annum
Working to support adults and their families who have complex social needs and are more vulnerable as a result of disability, exclusion, or diminished England, Essex, Harlow
Recuriter: Essex County Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue