Government finances and spending

This presentation was given to the Local Government Association's County Council's network on the potential impact of recent and proposed changes to local government finance on county councils.

This article on funding for local councils was published in the MJ.

Presented at the IFS Post-Spending Review/Autumn Statement Analysis on 26 November, 2015.

Presented at the IFS Post-Spending Review/Autumn Statement Analysis on 26 November, 2015.

Presented at the IFS Post-Spending Review/Autumn Statement Analysis on 26 November, 2015.

As George Osborne prepares for next week’s combined Autumn Statement and Spending Review announcement, figures released today by the Office for National Statistics suggest that he is on course to slightly overshoot the latest official forecast for borrowing this year of £69.5 billion. To meet his plan to cut borrowing thereafter and achieve a surplus by 2019–20, Mr Osborne faces two big challenges next week. The first is to divide up the shrinking budget for day-to-day spending by departments, while continuing to protect many areas of spending. The second is to remain within his welfare cap while taking on board the recent House of Lords motion that he must reconsider the tax credit cuts he announced in July.

The Institute for Fiscal Studies has published a comprehensive analysis of the impact of the government’s current tax and benefit plans and the National Living Wage on household incomes and financial work incentives. This Observation article summarises the main findings of that report ahead of the 2015 Autumn Statement, when the Chancellor is expected to announce amendments to his planned cuts to tax credits. The report finds that both the package of tax and benefit changes, and the new ‘National Living Wage’ will, on average, strengthen incentives to move into paid work and to work more if in work.

Public spending on the police was cut by 14% in real terms between 2010–11 and 2014–15. This Observation article, which summarises the main findings of new IFS research, places these spending cuts in the context of the large spending increases over the 2000s, and explores the differences between police forces in how they fared over these two periods.

Like the NHS, day-to-day spending on schools was protected from cuts in the last parliament and the new Conservative government has announced protections for schools spending in this parliament too. However, rising costs mean that schools are likely to face real-terms cuts on spending per pupil for first time since the mid-1990s. Although the cuts are likely to be smaller than those seen across other areas of government spending, these will leave schools facing significant challenges over the next five years.