Government Budgets ‘May fall by 25pc,’ IFS Says

(Telegraph) – GOVERNMENT DEPARTMENTS could see their budgets slashed by more than a quarter after the general election, the IFS has warned.

The Institute for Fiscal Studies said that Whitehall departments would have to find savings of £25 billion over the next two years, rising to £46 billion by 2014-15, to make Chancellor Alistair Darling’s Budget calculations add up.

However, the decision to protect front-line spending for schools, the NHS and the overseas aid budget for the next two years will mean the axe will fall disproportionately on other departments.

Carl Emmerson of the IFS said it had calculated that those departments whose budgets were unprotected would have to find savings of 14% – by 2012-13.

He said that, if the ring-fencing of the schools and health budgets were to continue after that, the savings would have to rise to 25.4% by 2014-15.

”This next spending settlement is set to be very tight for areas such as higher education, transport and housing,” he said.

The Government has been criticised for failing to provide details of cuts promised in the Budget.

The Treasury has said it will have to cut £39 billion from spending to meet targets for reducing the Government’s record deficit. That means almost £30 billion of cuts are yet to be explained.

The Ministry of Justice said it will save more than £340 million by closing 19 court buildings in England and merging bodies like the Meat Hygiene Service into the Food Standards Agency.

The Department of Children Schools and Families said it would make £1.1 billion of savings.

Some £950 million will come from schools, with savings also made at Sure Start children’s centres.

The department said the money will be saved by “greater use of collaborative procurement” and “reduced energy consumption”, but gave no details.

The Department of Health said the NHS will save £4.35 billion by driving down overheads, cutting agency staff and keeping people out of hospital where possible.

The department suggested that £1.5 billion will be saved by “driving down the cost of procurement.”

Annual savings of £550 million are expected from increasing staff productivity, reducing sickness and using fewer outside agency workers. And £60 million will be saved by using less energy.

Many other departments repeated previous broad commitments to save money by reducing consultancy bills, better procurement and information technology, and cutting staff absence.

The Ministry of Defence promised £700 million in savings from better “procurement and estate management.” The Home Office said it will save £350 million.

Vince Cable, the Liberal Democrat Treasury spokesman, said the programme was “totally vacuous” and suggested that most of the claimed savings will never be delivered.

He said: “If it’s inefficiency, why has it been tolerated all these years?”

George Osborne, the Conservative shadow chancellor, said: “This Labour Government has never been serious about tackling waste and inefficiency. Today’s announcements are meant to distract attention from the fact that they don’t have any spending plans beyond next year.”