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Monday, June 25, 2007

Squeeze Coming

The UK will experience a squeeze in public spending in the coming years, but the government has not made the British public aware of the hard times ahead.

That at least is the view of the Treasury Select Committee, in their report on the forthcoming Comprehensive Spending Review.

The report states that the government is "too timid" in stimulating a national debate on public expenditure, and has said that it should give clear indications of the decisions it is taking.

Committee chairman, John McFall, said:

"Our report highlights that the years of plenty in public spending are drawing to a close. The Treasury has not done enough to prepare the public for the squeeze that lies ahead."

The CSR was announced in 2005, and was set up to determine how much money each government department is to receive in the 2008-2009, 2009-2010 and 2010-2011. It is expected to be published this autumn.

The committee noted that the pre-budget report forecasted real growth in public spending during the period covered by the CSR of approximately 2%, this is half the rate of growth provided for during the period covered by the four previous CSRs.

McFall said:

"It is clear that the settlements for many departments will be tight.

Overall rates of growth in public spending in recent years have been very high. By those recent standards, there will be a squeeze in the years to come
."

The committee also recommended that the Treasury does a greater analysis into the overall impact of net migration on demand for public services in the UK.

McFall said:

"The Treasury told us that the fiscal benefit of inward migration is greater than the cost to public expenditure.

This may be the case, but the impact on public expenditure is uneven across the country, and this is an issue that requires cool analysis, not heated debate, and it is the job of the Treasury to promote and provide such analysis
."

He added:

"It is vital that every effort is made to verify that efficiency gains are not being made at the expense of service quality if the public is to have confidence that these are genuine efficiency gains, and not just spending cuts in disguise."

Don't hold your breath, there is no way that this government will actively publicise hard times to come.

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