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The IFS Green Budget, funded by the Nuffield Foundation and produced in collaboration with Oxford Economics, is published today.

The Chancellor’s decision to extend the fiscal consolidation through to 2018– 19 means even more dramatic spending cuts are now planned, despite the better headline economic news. By the end of this financial year only 40% of planned spending cuts will be in place.

Even with £12 billion a year of additional cuts to social security spending, Mr Osborne’s plans would imply cuts of more than 30% in "unprotected" public service budgets since 2010. In fact, the challenge could be even greater than these headline figures imply:

• The government has already made additional spending commitments of more than £6 billion a year after 2015–16 – implying additional cuts elsewhere;
• The population is projected to grow by about 3.5 million between 2010 and 2018. So while public service spending is set to fall by 1.7% a year over this period, public service spending per person is set to fall by 2.4% a year;
• Over the same period, the number of individuals aged 65 and over, who, on average, place greater demands on the NHS, is set to grow by two million. We calculate that, even if the overall NHS budget continues to be frozen in real terms, real age-adjusted health spending per person would be 9% lower in 2018–19 than in 2010–11.

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