Public services are under threat from a possible freeze on public spending forced on the government by the recession, according to the Institute for Fiscal Studies.
The IFS issued the warning yesterday in its annual ‘Green Budget’, an independent analysis of the economy intended to influence the chancellor Alistair Darling ahead of his Budget statement.
The report said there would be a “looming squeeze on public spending” if Darling stuck to the 1.1% increase over the next three years outlined in his Pre-Budget Report last November. According to IFS’s figures, this would lead to a £37bn cut in public spending.
Further analysis in the Green Budget revealed that public spending may have to be frozen in real terms until at least 2012-13. The report said that even priority departments, including the Department for Children, Schools and Families and the Department of Health, would not be immune from the squeeze despite a small real-term rise in their funding allocation.
The report also warned that 60,000 more pensioners could find themselves in poverty by 2017-18 as the recession forced the government to put back plans to relink the uprating of the basic state pension to average earnings by 2012.
In addition the IFS said that unless additional resources were found key child poverty targets for 2010 would not only be missed but would remain unmet ‘for some time’.
It has been reported that Alistair Darling could delay the Budget, which is usually launched in March, until after London pays host to the G20 summit scheduled for 2 April.