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Examining CSR 2007: Impacts on Public Spending and Services

This presentation by Carl Emmerson at the 2007 LGA Conference discusses the implications of the Comprehensive Spending Review (CSR) on public services in the UK. Emmerson highlights Labour's record on spending, projections for growth, and the challenges of a tightening budget amidst public service needs. Notably, the analysis emphasizes projected cuts and their potential effects on critical sectors like health and education. The discussion also raises concerns about the compatibility of spending plans with goals for poverty reduction, suggesting that increased funding may necessitate higher tax revenues.

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Examining CSR 2007: Impacts on Public Spending and Services

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  1. CSR 2007: Not the final settlement? Carl Emmerson Institute for Fiscal Studies Presentation to LGA Conference, “the comprehensive spending review”, Tuesday 23rd October 2007 www.ifs.org.uk/budgets/pbr2007/index.php

  2. The big picture: Labour’s record Labour I Labour II Borrowing = 2.7% of GDP Source: HM Treasury

  3. The big picture: going forwards Labour I Labour II Source: HM Treasury

  4. A challenging spending review Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  5. A challenging spending review Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  6. A challenging spending review Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  7. What is a spending cut?

  8. What is a spending cut? “The Conservative Party is committed to making cash cuts of £35 billion from Labour's public spending plans – cuts so large they could only be found from cutting deep into front-line public services, including schools, hospitals and the police.” (Alistair Darling, 17 March 2005)

  9. Breakdown of spending growth Source: HM Treasury; IFS calculations

  10. Breakdown of spending growth Source: HM Treasury; IFS calculations

  11. Breakdown of spending growth Source: HM Treasury; IFS calculations

  12. Breakdown of spending growth Source: HM Treasury; IFS calculations

  13. Relative winners? Average DEL increase = 2.1 per cent Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  14. Relative losers? Average DEL increase = 2.1 per cent Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  15. Winners and losers? Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  16. Winners and losers? Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  17. Winners and losers? Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  18. Local government settlement? Average = 0.8% Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; Department for Communities and Local Government; IFS calculations

  19. Local government settlement? Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; Department for Communities and Local Government; IFS calculations

  20. Local government settlement? Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; Department for Communities and Local Government; IFS calculations

  21. Local government settlement? Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; Department for Communities and Local Government; IFS calculations

  22. UK health spending Note: Assumes GDP deflator of 2.7% per year going forwards Source: HM Treasury; IFS calculations

  23. Health spending shortfall? • CSR 2007 settlement below Wanless 2002 recommendations for 2010–11 • £2bn under “fully engaged” scenario • £3bn under “solid progress” scenario • £6bn under “slow uptake” scenario Wanless (2007) “neither the assumed rate of productivity improvement nor the changes in personal behaviour that the more optimistic scenarios in the 2002 review envisaged have been achieved”

  24. But plans could be topped up? Departmental Expenditure Limits Note: Initial plans adjusted for subsequent inflation Source: HM Treasury

  25. The 2010 child poverty target

  26. Conclusions • Spending growth considerably slower than Labour’s spending reviews to date • growth in DELs planned to slow from 4.9% p.a. to 2.1% p.a. • Might prove incompatible with aspirations for public services and child poverty • Plans could be topped up • higher spending likely to require greater tax revenues

  27. CSR 2007: Not the final settlement? Carl Emmerson Institute for Fiscal Studies Presentation to LGA Conference, “the comprehensive spending review”, Tuesday 23rd October 2007 www.ifs.org.uk/budgets/pbr2007/index.php

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