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Spending Review 2004

This briefing examines the winners and losers of the Spending Review 2004, the government's child poverty targets, and the potential need for increased public spending. It highlights the need for greater efficiency and long-term policies to address child poverty.

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Spending Review 2004

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  1. Spending Review 2004 IFS Press Briefing www.ifs.org.uk/conferences/spending_review2004.shtml

  2. Public spending Carl Emmerson

  3. Total spending growth Source: HM Treasury

  4. Breakdown of spending growth Source: HM Treasury

  5. Winners and losers? (3 years) Average DEL increase = 4.1 per cent Source: HM Treasury

  6. 6.8 7.1 11.3 5.8 6.0 5.9 3.7 2.0 –1.2 5.1 Winners and losers? (2 years) Average DEL increase = 3.4 per cent Source: HM Treasury

  7. Plans and outturns: TME ? Source: HM Treasury

  8. Plans and outturns: DEL ? Source: HM Treasury

  9. Plans and outturns: AME ? Source: HM Treasury

  10. Civil service numbers over time Source: HM Treasury; IFS calculations

  11. Civil service numbers over time Source: HM Treasury; IFS calculations

  12. Admin spending Source: HM Treasury; IFS calculations

  13. Admin spending: 10th time lucky? Source: HM Treasury; IFS calculations

  14. Conclusions • Slower spending growth in 06-07 & 07-08 • NHS and defence relatively protected, slowdown in spending growth in all other areas • Greater efficiency growth needed for public services to improve at same rate • Previous projections have: • Underestimated growth in total public spending • Overestimated administrative savings

  15. The new child poverty targets Alissa Goodman

  16. Background “The Government’s long-term economic ambition is to halve child poverty by the end of the next decade as the Government moves forward with its commitment to end child poverty in Britain within the next twenty years” • Pre-Budget Report, 1999

  17. The new child poverty targets • Relative low income “Halve the number of children in relative low-income households between 1998-99 and 2010-11 on the way to eradicating child poverty by 2020” • Material deprivation Target will be set in 2006 when data becomes available

  18. Meeting the target

  19. Moving up the EU-15 league? Source: European Community Household Panel, 2001

  20. More public spending needed? • Child tax credit will need to be up-rated with earnings growth beyond 2005 • Not factored into SR2004 projections for AME?

  21. Growth in social security spending Note: Includes expenditure on tax credits Source: HM Treasury

  22. More public spending needed? • Child tax credit will need to be up-rated with earnings growth beyond 2005 • Not factored into SR2004 projections for AME? • Longer-term policies to change underlying income distribution also necessary

  23. Conclusions • Very ambitious target • Returns child poverty to pre-Thatcher era • Full costs not included in SR2004?

  24. Spending Review 2004 IFS Press Briefing www.ifs.org.uk/conferences/spending_review2004.shtml

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