IFS claims spending review is “regressive”

The government’s £81 billion cuts package is “regressive” and could cause 750,000 public sector job losses, according to research by the Institute for Fiscal Studies (IFS).

Chancellor George Osborne told the Commons on Wednesday that the comprehensive spending review’s (CSR) measures would ensure those with the “broadest shoulders” bear the brunt of the pain.

However, Carl Emmerson, acting director of the IFS, contradicts the government’s repeated assertion that the CSR is progressive.

He says: “Our analysis, published in August, shows that including a wider set of benefit reforms announced by this government leads to the conclusion that the impact of all tax and benefit measures yet to come in reduces the incomes of lower income households by more than that of higher income households, with the notable exception of the richest 2% of the population who are hardest hit.

“Therefore the tax and benefit changes are regressive rather than progressive across the income distribution. And when we add in the new measures announced on Wednesday this finding is, unsurprisingly, reinforced.” (article continues below)

The IFS analysis was followed by claims from the Chartered Institute of Personnel Development (CIPD) that public sector job losses could reach 750,000—some 50% higher than Treasury estimates, the Daily Telegraph reports.

Dr John Philpott, chief economic adviser of the CIPD, says: “The comprehensive spending review does not acknowledge the likelihood that the very large percentage cuts in the cost of administration across Whitehall, local authorities and even ostensibly ring-fenced areas of spending such as NHS, will have a disproportionately negative effect on some of the most labour intensive parts of the public sector.

“As a result, the CIPD estimates that the public sector jobs impact of the CSR to 2014-15 will be above 500,000, with total job losses rising close to three quarters of a million by 2015-16 if the coalition sticks to its existing longer term spending plans.”