Teaching Comparative Government and Politics

Wednesday, March 01, 2017

Budgets, not just for households

The US government budget is not the only one being debated these days. In the UK, budget makers are looking forward to more austerity. And what are the alternatives?

Government looks for new spending cuts of up to 6%

Government departments have been told to find spending cuts of up to 6% as part of plans to save £3.5bn by 2020…

Treasury… said the NHS and core schools budgets would not be included, with savings found by councils to be spent on under-pressure social services…

Departments have already faced significant cuts in their budgets since 2010, but they will now be told to find further savings of between 2% and 6% by 2019-20, the Treasury said, with up to £1bn to be reinvested in "priority areas"…

McDonnell

[S]hadow chancellor John McDonnell said further cuts would put councils in an impossible position and "it was difficult to see" how they would maintain services.

With interest rates so low, he said there was an "overwhelming case" for government to borrow to fund spending on infrastructure, such as roads, rail and broadband.

"The government has said schools and hospitals are going to be protected. That is simply not true. The NHS is suffering the biggest crisis since its foundation and schools are having the first budget cut per head since the 1970s… "

Public spending as a share of GDP has fallen steadily since 2010 when it totalled 45%. This year's figure is forecast to be 40%…

Chancellor Hammond

But ahead of his first Budget on 8 March, Mr Hammond is under pressure to increase spending on a number of fronts amid signs that stronger-than-expected tax receipts could give him additional room for manoeuvre…

Conservative MP Sarah Wollaston said the effects of an ageing society, on top of underlying financial pressures, were creating a "perfect storm" for the health service.

She said the NHS needed a cash "lifeline" in the Budget and that plugging gaps in day-to-day spending by re-allocating capital spending was a "false economy".

The government is being warned that a further dose of austerity, without better financial planning and reform, could push some public services to "breaking point"…