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Rachel Reeves, the Chancellor, is facing tough decisions as the government finalizes spending plans across various sectors such as the NHS, defense, schools, and the criminal justice system, according to a warning from the Institute for Fiscal Studies (IFS). The IFS highlighted that the level of spending on health will determine whether cuts will be necessary in unprotected areas outside of the aforementioned sectors. While funding is set to increase in 2024 for transportation, net zero initiatives, hospitals, schools, and prisons, the consistent year-on-year growth will cease due to government commitments.
The upcoming Spending Review on June 11 will delineate departmental budgets for the next three years and investment budgets for the subsequent four years. There is speculation among Whitehall insiders that the review will be contentious, with ministers vying for limited funds for their departments. Concerns are also raised about initiatives like increasing police numbers to combat violence against women and girls possibly not receiving adequate funding, in addition to ongoing debates over the continued funding for capping bus fares. Chancellor Rachel Reeves’s reluctance to increase borrowing or raise taxes has fueled speculation about impending spending cuts.
The IFS noted that the government front-loaded spending in the initial years of the parliamentary term, which will now slow down. This decision will have implications that need to be addressed. The think tank emphasized the pivotal role health spending plays in the Spending Review, as increased health funding could result in cuts to other unprotected departments. With NHS spending projected to reach £202 billion in 2025-2026, there may be trade-offs as the government aims to reduce patient wait times and enhance dental care access.
Furthermore, the IFS highlighted that escalating defense spending could further exacerbate the trade-offs in the Spending Review. Bee Boileau, a research economist at IFS, underscored the tough choices confronting the Treasury, with the flow of additional funding expected to diminish. The government’s commitment to boosting military spending to 2.5% of national income by 2027 will necessitate cuts in other areas. Despite the government’s flexibility in spending, tough decisions lie ahead in prioritizing future increases
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