IFS - Chancellor opens the door to a less generous Comprehensive Spending Review, with budget cuts for some departments a very real possibility
22 Jul 2020 01:15 PM
The Chancellor has committed to a multi-year Spending Review, to be concluded later in the year. He has committed to setting three years of resource (day-to-day) budgets, from 2021-22 to 2023-24, and four years of capital (investment) budgets, from 2021-22 to 2024-25.
Rishi Sunak has, however, rowed back from the overall spending "envelope" set alongside the March Budget, citing – quite reasonably – the unprecedented degree of economic uncertainty. The funding settlement announced in March was no bonanza, and implied tight settlements for areas outside of the priorities of the NHS, schools and the police.
This announcement, which opened the possibility of a reduced envelope and emphasised “tough choices” ahead, implies that those non-priority areas could now be facing cuts. The Chancellor committed to increasing overall departmental budgets in real terms, but given the size of the NHS budget and the generosity of its funding settlement, this tells us little about what lies in store for other, smaller public services.
Ben Zaranko, a research economist at the Institute for Fiscal Studies, said:
'The Chancellor has opened the door to a less generous funding settlement for public services than the one he committed to in March. Given the large amounts already promised for priority areas like the NHS, schools and police, and Rishi Sunak’s emphasis on the need for "tough choices", another round of budget cuts for other, lower-priority departments is a very real possibility.'