Think tank reveals cuts will dig deeper than politicians admit

The cuts will bite deeper than the politicians are letting on. So says a leading think tank today, warning that all three main parties are failing to be honest about the scale of public sector cuts they would implement after next Thursday's general election.

The Institute for Fiscal Studies criticises the main parties for failing to be straight with the public. A period of sustained austerity in public spending lies ahead, claims the IFS.

The financial think tank reveals: "Over the next four years starting next year (2011-12), Labour and the Liberal Democrats would need to deliver the deepest sustained cuts to spending on public services since the late 1970s". This is what is required to achieve the reductions in the UK's budget deficit these parties aim for.

It's even more serious if the Tories form the next government: "While starting this year, the Conservatives would need to deliver cuts to public spending on public services that have not been delivered over any five-year period since the second world war."

The Tories, to achieve their targets, will have to slash the budgets of Whitehall departments by £63.7 billion (in inflation-adjusted terms) by 2014-15. Only 17.7% of that total figure has so far been specified. This means the cuts will have to be much deeper than the Tories have so far publicly identified.

Labour, meanwhile, needs to cut spending by £50.8 billion to achieve its deficit reduction goals, but only 13.3% of that figure has been specified. The Lib Dems aim to cut £46.5 billion, yet just 25.9% of that has been specified.

The IFS says: "For the voters to make an informed choice in this election, the parties need to explain clearly how they would go about achieving it [deficit reduction]. Unfortunately, they have not. The opposition parties have not even set out their fiscal targets clearly. And all three are particularly vague on their plans for public spending."

The IFS said that all parties are committed to reducing fiscal output by £71bn in today's terms. That's 4.8% of the total. Labour plans to achieve this with a ratio of 2:1 between spending cuts and tax increases, the Lib Dems 2.5:1 and the Conservatives 4:1.

A comparison of these ratios illustrates how the Tories are particularly committed to swingeing spending cuts. But whichever party is in office, the scale of cuts is likely to be far greater than anticipated: "the next government may rely more on further tax increases and welfare cuts that any of the parties are willing to admit to beforehand."

The IFS also said the parties are guilty of "misleading" claims that spending reductions could be met through efficiency savings:
"Presumably the parties would try to spend public money as efficiently as possible whether or not they were trying to cut spending and would implement most if not all of these efficiencies anyway".

The think tank also offers insight into who would be hit hardest by public sector and welfare cuts. It confirms the poorest would be worst affected under the Tories' plan: "The Conservatives would make the pattern less progressive, reducing the losses of households at the top of the income distribution proportionately more than those at the bottom." In other words: the relatively well-off will be protected, while poorer people bear the brunt.

This report is a forceful warning of the deep damage threatened by a Tory government. But it also draws attention to how unexpectedly severe cuts could be under a Labour government or a Lib-Lab coalition. Whoever comes out on top from next week's election, mass political resistance to the cuts consensus will be needed.

This is also published at Counterfire.