21 Mar 2013

‘Heavy hint’ from Treasury: tax rises will come

The IFS chief Paul Johnson has spotted a line in the budget which he thinks is a “heavy hint” from Treasury civil servants that public sector cuts could be getting out of hand.

On p25 of the main Budget document it says:

“This Budget sets a fiscal assumption that TME (total managed expenditure) in 2016-17 and 2017-18 will continue to fall in real terms at the same rate as over the Spending Review 2010 period.34 Fiscal consolidation for 2016-17 and 2017-18 is expressed as a reduction in TME. It would, of course, be possible to do more of this further consolidation through tax instead.”

Mr Johnson, an old Treasury hand, says he’s heard that line was inserted by current senior Treasury hands who worry that the projected spending cuts outlined for after the next general election could prove impossible to deliver.

As the IFS has said before, taking into account ring-fencing the projected cuts imply cuts of around a third in unprotected departments’ budgets.

Paul Johnson seemed unimpressed by the hours of work put into making sure that the year-on-year borrowing figures in the budget crept down by the smallest possible amount rather than spike up.

“It’s unlikely,” he says, “that this (careful management of numbers) has led either to an economically optimal allocation of spending across the years or to a good use of time by officials and ministers.”

See the IFS analysis here: Fixing the budget to fix the figures?

Looking  back over the TV footage of the Budget speech itself, it’s quite clear that Ken Clarke slept through a chunk of it. Also clear that George Osborne wasn’t the only one with a croaky throat. You see the PM slip a lozenge into his mouth just behind the Chancellor 20 minutes into the speech.

Looking back over yesterday’s statement you also see that, a little unconventionally, the would-be candidate for the Tory leadership, Adam Afriyie MP, used the budget statement to tell MPs and the world a bit about himself (“growing up in a single parent household in social housing as a mixed race kid … working hard at school and eventually starting a business”), a reminder that at least one MP didn’t think this budget had altered the short-term or medium-term prospects of the current leadership.

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