Autumn Statement 2015: Scrap the spending cuts ringfence, say the Institute of Economic Affairs and Taxpayers’ Alliance
The government's decision to ringfence certain areas of spending means this week’s Comprehensive Spending Review is likely to be “incoherent and incomprehensive”, a prominent Westminster think tank has said today.
The Institute of Economic Affairs (IEA) said that because 70 per cent of government spending is protected, or ringfenced, cuts risk being made in the wrong areas.
Meanwhile, the Taxpayers’ alliance, a lobby group, also criticised the ringfence and called for cuts to pension increases.
The IEA points to the tax credits fiasco – widespread discontent with plans to cut top-ups to workers on low pay – as an example.
Currently, the NHS, pensions, per-pupil funding for schools, international aid and defence budgets are all protected.
“Rather than salami-slicing the budgets of non-ring-fenced departments to hit arbitrary savings targets, the government should completely rethink its approach to closing the deficit. Every area of spending should come under the microscope,” said IEA director general Mark Littlewood.
TPA chief executive Jonathan Isaby said: “Tricky manifesto promises and political fights over issues like tax credits mean that George Osborne should look again at protected areas of spending to root out the waste and improve efficiency, meaning better value for taxpayers.”
The TPA suggested scrapping entire departments such as the department for business, innovation and skills, the department for culture, media and sport and the department of energy and climate change, transferring necessary functions to other departments. It believes £7bn a year could be saved this way – borrowing is set to come in at around £70bn this financial year.
The TPA also wants to see an end to the triple lock on pensions, which increases payments in line with highest of inflation, earnings growth or 2.5 per cent.