Spending Review explanation 'was woeful', IFS says

The chancellor carries the Spending Review documents
Image caption The chancellor delivered the Spending Review to Parliament on Wednesday

The Institute for Fiscal Studies (IFS) has criticised the documentation and explanation of Wednesday's Spending Review as "woeful".

"Publishing such a small amount of information with so little explanation is not an exercise in open government," said IFS director Paul Johnson.

He also expressed surprise that there had been no outcry at news that 144,000 public sector jobs will go in a year.

"We seem to have got used to this level of austerity," he said.

The IFS gave as an example of the lack of information the fact that the Budget had said that Home Office expenditure limits for day-to-day spending would be £7.4bn while the Spending Review said it would be £10.4bn, without any explanation.

It turned out that it was a result of the police grant moving to the Home Office budget from the Local Government budget, but that information was hard to come by.

Gemma Tetlow, one of the analysts at the IFS, said that the inconsistencies in the figures meant it was "next to impossible" to establish the size of cuts to individual departments for the whole period from the 2010-11 until 2015-16.

The institute's best estimate found that the biggest cut over the period had been to the communities part of the Department for Communities and Local Government, which lost 60.6% of its budget.

Next hardest hit was the Foreign and Commonwealth Office, which was losing 55.1%, while Culture, Media and Sport was third place with a 45% cut.

The department that has fared best has been International Development, which has seen its budget grow by 35.5% as a result of the government's continued commitment to overseas aid.

'Looks tough'

The influential think tank pointed out that the cuts announced in the Spending Review would take the split between spending cuts and tax increases away from the 80% cuts, 20% taxes originally planned, to an 85%-15% split.

Getting back to the 80%-20% balance would require a £6bn tax increase after the next election, which the IFS pointed out would be close to the average tax rise seen in post-election budgets in recent decades.

It suggested that the £25bn of additional cuts pencilled in for the two years after 2015-16 "looks tough indeed".

One of the debates since the chancellor's speech on Wednesday has been whether investment in infrastructure is going to rise.

The IFS said that public sector net investment would be "broadly flat" over the next four years.

Paul Johnson criticised the decision to freeze council tax for a sixth year, saying: "However much council tax payers may welcome it this is not a sensible reform."

He pointed out that council tax was the only tax on property and that the longer it was frozen the harder it would be to unfreeze it.

He suggested that the marginalisation of council tax was being introduced without proper announcement or debate.

'Being cynical'

Carl Emmerson from the IFS questioned aspects of the policy of capping some welfare payments.

"If the cap is a good thing then why wait until 2015-16," he asked.

"If you were being cynical you might suggest the government wanted to avoid doing it before the election."

He also questioned why you would cap a selection of payments together, because that would mean you could end up cutting housing benefit to make up for a rise in incapacity benefit, for example.

He suggested it would be better to cap each individual benefit.

But he said that if the policy would ensure that governments reviewed aspects of their spending regularly then it would be a good thing.

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