Spending Review 2004
description
Transcript of Spending Review 2004
Spending Review 2004
IFS Press Briefing
www.ifs.org.uk/conferences/spending_review2004.shtml
Public spending
Carl Emmerson
Total spending growth
-0.3
0.21.0
5.5
3.7 3.8
6.7
3.9 4.2
2.6 2.8
-1012345678
97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08
Rea
l gro
wth
in s
pend
ing
(%)
Source: HM Treasury
Breakdown of spending growth
4.2
2.6 2.8
5.5
3.63.1
2.5
1.3
2.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2005–06 2006–07 2007–08
Rea
l inc
reas
e in
spe
ndin
g (%
)
TME DEL AME
Source: HM Treasury
Winners and losers? (3 years)
1.2%1.3%1.4%
3.9%4.5%
7.1%9.2%
1.9%2.3%
2.6%2.8%
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Environment, Food and Rural Affairs
Defence
Foreign and Commonwealth Office
Housing
Culture, Media and Sport
Home
Trade and Industry
Education (UK)
Transport
NHS (UK)
International Development
Average annual real increase 2004–05 to 2007–08
Average DEL increase = 4.1 per cent
Source: HM Treasury
Winners and losers? (2 years)
1.1%
3.3%2.8%
7.0%5.5%
0.7%
1.0%2.3%
1.4%1.0%
1.3%
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Environment, Food and Rural Affairs
Defence
Foreign and Commonwealth Office
Housing
Culture, Media and Sport
Home
Trade and Industry
Education (UK)
Transport
NHS (UK)
International Development
Average annual real increase 2005–06 to 2007–08
Average DEL increase = 3.4 per cent
6.87.1
11.35.86.05.93.7
2.0–1.2
5.1
Source: HM Treasury
Plans and outturns: TME
3.22.8
4.3
3.23.4
4.7 4.9
0
1
2
3
4
5
6
CSR 98 SR 00 SR 02 SR 04
Rea
l gro
wth
in s
pend
ing
(%)
Original plan Latest estimate
Source: HM Treasury
?
Plans and outturns: DEL
3.7
4.95.3
4.1
5.6 5.75.2
0
1
2
3
4
5
6
CSR 98 SR 00 SR 02 SR 04
Rea
l gro
wth
in s
pend
ing
(%)
Original plan
Latest estimate
Source: HM Treasury
?
Plans and outturns: AME
2.7
0.3
3.0
2.0
0.7
3.3
4.5
0
1
2
3
4
5
6
CSR 98 SR 00 SR 02 SR 04
Rea
l gro
wth
in s
pend
ing
(%)
Original plan Latest estimate
Source: HM Treasury
?
Civil service numbers over time
0
100
200
300
400
500
600
700
89-9
091
-92
93-9
495
-96
97-9
899
-00
01-0
2
03-04
05-0
6
07-0
8
Financial year
Full
time
equi
vale
nts
('000
)
HMT April 2004
IFS constructed series
Source: HM Treasury; IFS calculations
Civil service numbers over time
400
450
500
550
600
650
700
89-9
091
-92
93-9
495
-96
97-9
899
-00
01-0
2
03-0
4
05-0
6
07-0
8
Financial year
Full
time
equi
vale
nts
('000
)
IFS constructed series HMT April 2004HMT May 2003 HMT May 2002HMT May 2001 HMT May 2000HMT May 1999 HMT Apr 1998HMT May 1997 HMT Mar 1996HMT Feb 1995
Source: HM Treasury; IFS calculations
Admin spending
2.0
2.5
3.0
3.5
4.0
4.5
5.0
89-90
90-9
191
-9292
-9393
-9494
-9595
-9696
-9797
-9898
-9999
-00
00-01
01-0
2
02-0
3
03-0
4
04-05
05-0
6
06-07
07-0
8
Financial year
Per
cent
age
of T
ME
HMT July 2004HMT April 2004IFS constructed series
Source: HM Treasury; IFS calculations
Admin spending: 10th time lucky?
2.0
2.5
3.0
3.5
4.0
4.5
5.0
89-9
090
-9191
-9292
-9393
-9494
-9595
-9696
-9797
-9898
-9999
-00
00-0
1
01-0
2
02-0
3
03-0
4
04-0
5
05-0
6
06-0
7
07-0
8
Financial year
Per
cent
age
of T
ME
HMT July 2004 IFS constructed seriesHMT April 2004 HMT May 2003HMT May 2002 HMT May 2001HMT May 2000 HMT May 1999HMT Apr 1998 HMT May 1997HMT Mar 1996 HMT Feb 1995
Source: HM Treasury; IFS calculations
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
The new child poverty targets
Alissa Goodman
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
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 deprivationTarget will be set in 2006 when data becomes available
Meeting the target
0%
5%
10%
15%
20%
25%
30%
35%
1960 1970 1980 1990 2000 2010 2020
Per c
ent o
f chi
ldre
n in
pov
erty
Moving up the EU-15 league?
0.0
10.0
20.0
30.0
Finland
Denmark
Sweden
Belgium
Austri
a
2010
TARGET
German
y
Netherl
ands
France
Greece
Luxem
bourg
United
Kingdo
mIta
ly
Irelan
dSpa
in
Portuga
l
Per c
ent o
f chi
ldre
n in
pov
erty
Source: European Community Household Panel, 2001
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?
Growth in social security spending
1.2 1.0
2.1
4.03.2
5.4
1.2
6.2
2.6
0
1
2
3
4
5
6
7
99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08
Rea
l gro
wth
in s
pend
ing
(%)
Note: Includes expenditure on tax creditsSource: HM Treasury
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
Conclusions
• Very ambitious target
• Returns child poverty to pre-Thatcher era
• Full costs not included in SR2004?
Spending Review 2004
IFS Press Briefing
www.ifs.org.uk/conferences/spending_review2004.shtml