Max Warner - Public service spending: challenges and @TheIFS options

Public service spending: challenges and options Max Warner Public service spending: ▪ 10th October 2024 IFS Green Budget challenges and @TheIFS options The public spending challenge 1. [...] ‘unprotected’ public services in 2028–29 20 +£5bn 10 +£9bn 0 Pay pressures Manifesto No real-terms cuts No cuts to unprotected in baseline promises to unprotected budgets as % of budgets national income ‘Status quo’ Public service spending: challenges and options © Institute for Fiscal Studies £ billion extra in 2028–29 (cash terms) Scenarios for day-to-day top ups 50 Top-up in 2028–29: £30 billio. [...] 30 +£16bn 20 +£5bn 10 +£9bn 0 Pay pressures Manifesto No real-terms cuts No cuts to unprotected in baseline promises to unprotected budgets as % of budgets national income ‘Status quo’ Public service spending: challenges and options © Institute for Fiscal Studies £ billion extra in 2028–29 (cash terms) Scenarios for day-to-day top ups 50 Top-up in 2028–29: £47 billion Average growth: +2.8% p.a. [...] 30 +£16bn 20 +£5bn 10 +£9bn 0 Pay pressures Manifesto No real-terms cuts No cuts to unprotected in baseline promises to unprotected budgets as % of budgets national income ‘Status quo’ Public service spending: challenges and options © Institute for Fiscal Studies £ billion extra in 2028–29 (cash terms) Scenarios for capital top ups 20 Top-up in 2028–29: £19 billion Average growth: +1.8% p.a. [...] +£4bn 5 +£6bn 0 Manifesto promises No real-terms cuts to No cuts to overall CDEL 'Status quo' overall CDEL as % of national income Public service spending: challenges and options © Institute for Fiscal Studies £ billion extra in 2028–29 (cash terms) Taken together ▪ Precise numbers matter less than the magnitude ▪ Under reasonable assumptions, total top-up could be large ▪ Avoiding real-terms cuts.