Government finances and spending

This presentation was the Presidential address at the Society for Labor Economics, World Meeting in London, June 2010.

This presentation was an invited Address at the Canadian Economics Association Meetings, Quebec, June 2010.

Iain Duncan Smith, the Secretary of State for Work and Pensions, today gave a little more detail on the Government's plans for welfare reform, suggesting that the benefit system needed simplifying, incentives to work strengthening, and welfare-to-work programmes reforming . But what can actually be done?

The new coalition Government has announced a £6.2 billion headline cut to public spending in the current year. Since £500 million is being recycled into additional spending or tax cuts, and the £704 million earmarked for devolved administrations does not have to be found until next year, the likely reduction in borrowing in 2010-11 is around £5 billion. This is less than a tenth of the fiscal repair job that Alistair Darling's March 2010 Budget forecast suggested will be needed over the next few years.

This presentation focuses on how big the hole in the public finances is and what filling it might mean for spending on public services.

The Labour party is pointing to the fact that the Conservative Party and Liberal Democrats are proposing cuts to child tax credit for middle- to high-income families with children. But just what cuts are being proposed and which families would be affected? And how different is this from current policy?

All the main UK political parties claim to have put the needs of families at the heart of their campaigns. The Conservative Party has also pledged to end the couple penalty for all couples in the tax credit system. How does the reality - as measured by specific pledges in their manifestos - match up to the rhetoric?

This presentation was delivered at the IFS 2010 Election Briefing on 27 April 2010.

This presentation was delivered at the IFS 2010 Election Briefing on 27 April 2010.

Robert Chote, Director of IFS, delivered these opening remarks at the IFS 2010 Election Briefing on 27 April 2010.

This presentation was delivered at the IFS 2010 Election Briefing on 27 April 2010.