The Conservative Party manifesto has failed to answer the question of where billions of pounds of cuts to unprotected public services would fall and has added to the pressures departments are facing, the Institute for Fiscal Studies has warned.
The think tank said the Conservative government’s spending plans in the Spring Budget already implied cuts of £10-20bn to unprotected departments, with the commitments spelled out in the manifesto only increasing the levels of savings that departments will have to find.
The Conservatives’ manifesto promises £17bn per year of tax cuts and a big hike in defence spending. It says these will be funded through cutting the civil service headcount, reducing consultancy spending, “quango efficiencies”, reducing the projected welfare bill by £12bn, and cracking down on tax avoidance and evasion.
IFS director Paul Johnson described these promises as “definite giveaways paid for by uncertain, unspecific and apparently victimless savings”.
Beyond this balancing act, Johnson said the manifesto had failed to signal “where the £10-£20bn of cuts to spending on unprotected public services, as implied by the March Budget, might come from".
"Indeed, the billions of savings from cutting civil service numbers and the rest noted in the manifesto have been earmarked to fund the additional defence spending, and would come on top of those cuts," he said.
Johnson added: “This manifesto remains silent on the wider problems facing core public services – and if you think those civil servants, management consultants and quangos were delivering anything, these plans imply an even tougher time than set out back in March."
Digging deeper into the implications of the proposals on public services, Bee Boileau, a research economist at IFS, said the manifesto had “left existing plans for overall spending levels on public services after the election virtually unchanged”.
She said the party’s commitments implied that by 2029-30, department’s total spending plans would be topped up by £500m, “less than one-tenth of 1% of total departmental spending”.
Boileau said this would mean “large real-terms cuts to day-to-day spending in a range of unprotected areas, many of which are still at lower real funding levels than in 2010”.
Delivering these cuts – to areas including further education, prisons, and criminal courts – “would not be consistent with a desire to maintain current levels of service provision, let alone delivering improvements”, she said.
“This is particularly the case since a range of cuts identified in the Conservative Party manifesto have been earmarked to fund higher defence spending, so cannot now be used to top up spending plans elsewhere,” she sadded.
Boileau also warned that the Conservatives had failed to lay out where cuts to investment spending would fall, “since plans have not been laid out on a departmental basis”.
She said, however, that one of the pledges in the manifesto on school budgets could help to reduce the pressures on unprotected departments. The manifesto committed to protect schools budgets in per-pupil terms only. Boileau said projected falling pupil numbers means it is possible schools spending could be slashed by £3.5bn, helping to reduce the cuts faced by other departments.
'Big questions over plausibility'
Also responding to the manifesto, the Resolution Foundation think tank warned that the plans “rest on £33bn of spending cuts in order to get debt falling” – the £12bn in welfare cuts, plus its estimate that £21bn of cuts to unprotected departmental spending will be needed. It said these cuts will be required to meet the party’s aim of getting debt falling within five years – “raising big questions over whether this tax-and-spend package passes the plausibility test”.
Mike Brewer, interim chief executive of the Resolution Foundation, said: "Given the weak state of the public finances, these fresh tax cuts rest on already announced tax rises, heroic efforts to reduce tax avoidance, and £33bn of combined cuts to disability benefits and public services that will be extremely challenging to deliver. That may explain why there is scant detail on these cuts.
“There are big questions over whether doubling down on firm tax commitments, funded by pledges to massively cut spending in record time, really passes the plausibility test, or whether this approach answers the big economic challenge Britain faces on growth."
The foundation warned also warned that the plans to raise £6bn through cracking down tax avoidance and evasion, combined with the proposal to drive down spending on benefits by £12bn, would required "heroic efforts on the part of both HMRC and DWP".
It also cautioned that fiscal risks such as lower productivity growth "could blow another £17bn hole in these plans", Brewer said: "The unspoken issue looming over this manifesto is that it will only take a small dose of bad economic news for these plans to fall foul of the fiscal rules, and for a future Conservative government’s tax and spend plans to have to return to the drawing board.”