Post Budget Slides-1.pptx [Recovered]

Public spendingGemma TetlowGemma Tetlow

© Institute for Fiscal Studies

Wh did B d 2009 d di l ?What did Budget 2009 do to spending plans?

CSR2007 i d• CSR2007 period

• Spending Review 2010 period

Spending Re ie 2013 period and a first look at SR2016?• Spending Review 2013 period and a first look at SR2016?


Changes to spending plans in Budget 2009:U M h 2011Up to March 2011

All ti f £5b f d t t l ffi i i f 2010 11• Allocation of £5bn of departmental efficiency savings for 2010–11 announced

– £0.6bn for Department of Children, Schools and Familiesp ,

– £2.3bn for Department of Health

• Biggest “savings” as a share of total budget

– Transport and Home Office

• Real spending growth over CSR2007 period now expected to be

– Current spending: 4.6%

– Investment spending: 5.4%

Total spending: 4 6%– Total spending: 4.6%


Changes to spending plans in Budget 2009:A il 2011 M h 2014April 2011 to March 2014

PBR 2008 l• PBR 2008 plans

– Current spending: real growth of 1.2% a year

– Investment spending: real cuts of 2 6% a year– Investment spending: real cuts of 2.6% a year

– Total spending: real growth of 1.1% a year

• Budget 2009 plansg p

– Current spending: to grow at 0.7% a year in real terms

• Lowest 3-year growth since: April 1997 to March 2000

– Investment spending: “move to 1¼ per cent of GDP in 2013–14”

• Real cuts of 17.3% a year

L t 3 th i A il 1996 t M h 1999• Lowest 3-year growth since: April 1996 to March 1999

– Total spending: to be cut by 0.1% a year in real terms

• Lowest 3-year growth since: April 1996 to March 1999o est 3 yea g o t s ce: p 996 to a c 999


H i h h di l ?How tight are these spending plans?

-5.0

1.5

Conservative governments: 1979-80 to 1996-971.7

3 0

5.0

0.0Lab, inherited Con spending plans: 1997-98 to 1998-

Conservative governments: 1979 80 to 1996 97

-0.1

3.0

4.0

p g p99

Total

3.6

16.4

4.7

1999-00 to 2007-08 Investment

Current

4.6

5.4

-0.1

Latest forecast for 2008-09 to 2010-11

0.7

-17.3

25 20 15 10 5 0 5 10 15 20 25

Plans for 2011-12 to 2013-14


-25 -20 -15 -10 -5 0 5 10 15 20 25Average annual percentage real increase

A ibl S di R i 2010 ll iA possible Spending Review 2010 allocation

11 Average annual real increases April 2011 to March 2014

7

9

11

al in

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Average annual real increases, April 2011 to March 2014

3

5

7

age

annu

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Remainder: other Total Managed ExpenditureManaged Expenditure




8.4

7

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-3

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Debt interest Remainder: other Total Managed ExpenditureManaged Expenditure




8.4

7

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11

al in

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3

5

7

age

annu

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1.7

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1

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Debt interest Social security & tax credits

Remainder: other Total Managed Expenditurecredits Managed Expenditure




8.4

7

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Debt interest Social security & tax credits

Other AME Remainder: Departmental Expenditure Limitscredits Expenditure Limits


Whi h d i h i l ?Which departments might experience real cuts?

T t l DEL t t b 2 7% f A il 2008 t M h 2011• Total DEL set to grow by 2.7% from April 2008 to March 2011

• Plausible scenario suggests 2.3% a year real cuts over following three yearsthree years

• What if the pain were to be shared evenly?


Departments getting real spending increases: CSR2007CSR2007

Real increases Real cutsReal increases Real cuts

HealthChildren Schools and Families

TransportDefenceChildren, Schools and Families

Innovation, Universities and SkillsLocal governmentHome Office

Defence

Home OfficeJusticeInternational DevelopmentCulture Media and SportCulture, Media and SportScotlandWalesNorthern IrelandNorthern Ireland


Departments getting real spending increases: SR2010SR2010

Real increases Real cutsReal increases Real cuts

HealthChildren Schools and FamiliesChildren, Schools and Families

Innovation, Universities and SkillsLocal government

Home Office

International Development

Home OfficeJustice

Culture, Media and SportScotlandScotland

WalesNorthern Ireland

TransportTransportDefence


Changes to spending plans in Budget 2009:B d A il 2014Beyond April 2014

3 2% f ti l i fi l ti ht i ill d i f 2014 15• 3.2% of national income fiscal tightening pencilled in for 2014–15 to 2017–18

• If all found from spending…If all found from spending…

– Average 0.5% a year real growth in current spending for four more years

d f h l– Lowest consecutive 7-year period of growth since April 1985 to March 1992


C di d hi i lCurrent spending squeezed: historical context

12.0Outturns

8.0

10.0

reas

e

Outturns

Budget forecast: CSR 2007

Budget forecast: 2011-12 to 2013-14

4.0

6.0

ntag

e re

al in

c

0.0

2.0Per

cen

-4.0

-2.0

65

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Financial year


y

Changes to spending plans in Budget 2009:B d A il 2014Beyond April 2014

3 2% f ti l i fi l ti ht i ill d i f 2014 15• 3.2% of national income fiscal tightening pencilled in for 2014–15 to 2017–18

• If all found from spending…If all found from spending…


d f h l– Lowest consecutive 7-year period of growth since April 1984 to March 1991

• If half found from spending…p g


L t ti 7 i d f th i A il 1993 t– Lowest consecutive 7-year period of growth since April 1993 to March 2000


C di dCurrent spending squeezed

12.0Outturns

8.0

10.0

reas

e

Outturns



4.0

6.0

ntag

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al in

c

0.0

2.0Per

cen

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65

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Financial year


y

C di dCurrent spending squeezed

12.0Outturns

8.0

10.0

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Outturns



4.0

6.0

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0.0

2.0Per

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65

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Financial year


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SSummary

P bli di t b d ti htl th f• Public spending to be squeezed tightly over the seven years from April 2011

• 0.1% a year real cut in total spending over SR2010 period0.1% a year real cut in total spending over SR2010 period

– Plausible scenario for departmental spending suggests 2.3% a year real cuts

f h d ll– If pain shared equally

• Only priority department experiencing real spending increases would be International Development

• Health, education, law and order would all experience real cuts

• Further cuts beyond April 2014?

– 3.2% of GDP tightening required: at least some from spending?

– If all taken from spending, would take non-debt interest spending back down to 2002 levelback down to 2002 level


Post Budget Slides-1.pptx [Recovered]

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