Scale of public sector cuts required being kept from employers, IFS warns

Employers and the public are being kept in the dark about the level of public sector cuts required to tackle the national deficit, the Institute for Fiscal Studies (IFS) has warned.

The IFS said the three main parties have up to £52bn-worth of black holes in their economic plans to address government finances after the election.

It added any government run by any of the three main parties would find it impossible to cut public services as sharply as they have proposed and would have to raise billions more in taxes, the Daily Telegraph has reported.

The IFS found Conservative plans to cut the deficit by more than £70bn over the next parliament would lead to a squeeze on government spending not seen since the 1920s, while under Labour and the Liberal Democrats, public spending would face the biggest cuts since the 1970s.

The Tories face a £52.4bn gap in their spending plans and Labour’s black hole is estimated at £44.1bn. The Liberal Democrats have an unexplained gap of £34.5bn, according to the IFS.

Robert Chote, director of the IFS, said no party had brought forward proposals for significant welfare cuts, which meant reductions in spending on services would have to be deeper.

He said: “Over the four years starting next year, Labour and the Liberal Democrats would need to deliver the deepest sustained cuts to spending on public services since the late 1970s.

“While, starting this year, the Conservatives would need to deliver cuts to spending on public services that have not been delivered over any five-year period since the Second World War.”

The IFS figures suggested the last time similar cuts were introduced was in the 1920s.

The IFS also criticised the parties for “misleading” claims indicating that spending reductions could be met through efficiency savings.

Chote said: “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.”

He added the parties were “over-ambitious” about how much could be cut from public expenditure, and said the next government would have to rely much more on “tax increases and welfare cuts” than the parties were currently admitting.

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