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ippr to the Spending Review

Responding to the Chancellor’s Spending Review, ippr Director Nick Pearce said:

By cutting so far and so fast the Chancellor is putting the economic recovery at risk. While relative protection has been given to investment in transport and science, overall infrastructure spending is still being sharply cut, particularly on social housing and regeneration. This is a mistake the Coalition inherited from the Labour government and it should be reversed.

There is good news on real increases in school funding and on more money for nursery education for disadvantaged two year olds. But at the other end of the age range, badly targeted universal benefits like winter fuel allowances, free TV licences and bus passes – many of which go to increasingly prosperous pensioners – are protected. A rising Basic State Pension is vital, but these other benefits have been saved at the expense of the working poor, who will see cuts in working tax credits and childcare funding, and the young, who will have Education Maintenance Allowances removed and face rising tuition fees and higher house prices.

The Chancellor claimed that one of the principles of his Spending Review was fairness. But if you cut spending by 77 per cent and raise taxes by only 23 per cent, a larger burden will fall on those who rely most on public services. The whole exercise in reducing the deficit can only be described as fair towards the less well off because it includes the last Labour government’s tax rises which were targeted on the more affluent. The Chancellor’s own chart shows the spending cuts and benefit and tax credit changes are regressive.


Tim Finch, Director of Communications: 020 7470 6110 / 07595 920 899 /

Note to editors

ippr's alternative plan for deficit reduction Cutting the deficit: There is an alternative by Tony Dolphin is available at

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