Healey’s budget paves way for ‘brutal’ spending review next year, warns IFS
Summary
The Institute for Fiscal Studies said John Healey’s budget leaves a large funding gap for the next spending review and could mean real-terms cuts to some public services. The IFS estimated that avoiding those cuts could require £17bn in extra funding for 2030–31, plus £11bn to meet the government’s defence spending commitment, increasing the prospect of tax rises.Key Facts
- The IFS said departmental spending plans were broadly unchanged in cash terms.
- The IFS estimated that avoiding austerity for unprotected departments could require an extra £17bn in 2030–31.
- The estimate excludes a further £11bn needed to fund a commitment to spend 3% of GDP on defence.
- IFS director Helen Miller said some public services could face real-terms cuts under the current plans.
- Miller said she doubted the government would carry out the implied cuts.
- Healey raised taxes on banks and landlords to fund relief for households affected by higher energy costs.
- The budget left £15bn of headroom against the government’s fiscal rules, down from the £23.6bn buffer left by his predecessor, Rachel Reeves.
- The IFS described reducing the fiscal headroom as a reasonable choice but criticized the deferral of major spending decisions until next year.
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