UK heading towards a funding ‘cliff edge’, warns think-tank

16 comments

1. (Article)

   —

   The next UK government should prioritise a one-year spending review ahead of a December planning “cliff-edge”, a think-tank has warned.

   The Institute for Government has cautioned in a report published on Thursday that departmental, local authority and devolved administration expenditure beyond next spring is mired in a level of uncertainty unseen for decades.
   The upcoming general election, which is expected later this year, will be closer to the date that current government budgets are set to expire — April 2025 — than at any other point in the past 40 years, the think-tank found.

   No government since at least 1998 has left it later than November to set spending plans for the following financial year. The IfG has identified December as a “cliff edge” for departmental budgets, warning that completing a spending review any later would “lead to high levels of instability”.

   Whitehall budgets were last drawn up for a three-year period in 2021. Pressure has been mounting on the Treasury since last year to conduct a new multiyear review, to grant departments more certainty about their funding in the years ahead.

   “There is already a risk of delayed and inefficient spending on services and projects. An autumn polling day could leave just weeks to set spending plans. A winter election could land the next government in uncharted territory from day one,” the IfG said.

   The think-tank is urging the next government to conduct two spending reviews in the next five-year parliament — an urgent one-year spending round to allocate budgets for 2025/26, completed by the end of this year if possible, followed by a comprehensive multiyear spending review, completed by next autumn.

   Chancellor Jeremy Hunt confirmed at the Budget in March that the next spending review would not take place until after the upcoming general election. However, he admitted later that month that the spending review could face a crunched timetable if the general election did not take place until October.

   “This particular spending review has to be completed before next April, when the next financial year starts. If the general election is in October, that will mean it is very tight,” Hunt told the House of Lords economic affairs committee.

   The latest possible date the general election can be held is January 28 2025.

   A series of tough spending choices lie ahead. The IfG calculated that government spending commitments on the NHS, schools, childcare, international development and defence mean expenditure is set to fall in other areas by 2.6 per cent per year in real terms over the next four years. Other economists have predicted that even deeper cuts to unprotected departments will be required.

   Hunt insisted that the Tories were already thinking about the most important elements of the next spending review, including how to improve productivity in public services, and the investment needed to avoid cuts “in the services valued by the public”.

   “With budgets set to expire in March, government finances are facing exceptional and potentially damaging uncertainty,” said Olly Bartrum, senior economist at the IfG.

   “It is essential that both politicians and the civil service begin preparations for a rapid spending round to set budgets for the next financial year within months or, in the case of a late election, weeks of the new government taking office.”

   A Conservative insider said no decisions had been made about the format of the next spending review.
   The Labour party and the Treasury have been contacted for comment.

2. They know they’re not gonna be in control next year so they’re literally not bothering perhaps?

3. Print some money. The pound will devalue giving domestic producers an edge over imports, and exports will become more competitive.

4. Poisoning the well for Labour. They’re going to make the “sorry there’s no money” note look like absolutely nothing by comparison.

5. This suggested that things are well funded at the moment. We’re paying record taxes for failing services. NHS trusts and local councils are all drowning in debt. The private sector has moved in to delivery worse services at higher costs and this think-tank think we’re heading towards a cliff edge? We fell off that edge in 2016 and have been in free fall since. It will get worse and I don’t think anyone can stop it

6. By design. They want Labour incapable of fixing it in five years 

7. Leaving a steaming pile of shit for after the election is a feature, not a bug.

8. One of the scariest things about the next decade is how much debt we have despite having non-functional public services. Everything needs more money but we’re already pushing unacceptable debt to GDP ratios alongside a rather high tax take as % of GDP.

   The state pension benefits time bomb continues to grow with triple lock reaffirmed by Labour.

9. So higher taxes are coming to fund skeletal services.

   We’re already at a higher tax burden than world war 2.

   This isn’t sustainable. Tax is crazy high.

10. In these circumstances, it’s clear cannot afford the mooted increase in defence expenditure to 2.5% of GDP without horrendous further cuts to public infrastructure.

11. Every single issue this country has is resolved by building houses.

    It means more jobs in tangible industries, more money traveling around the actual economy and less taxes going straight into the asset-class blender.

12. We’re not. We’re already over the edge currently doing the cartoon trope where the character doesn’t fall until it looks down.

13. Just cancel all the terrible contracts, starting with Rwanda.

14. I dont know why Labour aren’t going so much harder on how much the tories have absolutely f*cked everything – they’re essentially saying as much themselves. The “tanked the economy” line followed the last Labour government for a decade and people are STILL referencing “no money left”! I cant believe that we are in this state and its not impossible that Tories may be back in power in 5 years time.

15. I hope people understand that it’s very difficult to start when you’re given a shittty situation to begin with. Economic reforms and their benefits take time. Not that it isn’t possible within 5 years to realize an economic benefit but the tories are trying to make life as hard as possible for the labour party at least financially.

    When you vote, please keep this in mind- it takes time to build a nation but to ruin you need just one tory.

16. Venture capitalists are people who take over functional businesses and run them into the ground, on the altar of “efficiency”.
    They then pay themselves huge bonuses for doing so, while loading the business with unsustainable debt!
    They then move on leaving the business to fold, dumping it’s, by now, stressed out staff onto the scrapheap with the bare minimum redundancy, if they get any at all!

    For the last 20 years Britain has been governed by Venture Capitalists!