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None of Britain's political parties has yet shown how they will fill a £90billion gap in public finances, a leading think tank said today.
Carl Emmerson, of the Institute for Fiscal Studies, said far bigger spending cuts or tax rises would be needed than any of the parties had admitted.
"It is going to be very dramatic and involve very difficult decisions," he warned. "The total gap that the Treasury is trying to address is worth £90billion."
Mr Emmerson said many ideas mooted were too small to plug the hole. For example, withdrawing tax credits from better-off families, an idea being considered by the Liberal Democrats, would save only £1.3billion.
Putting up VAT, which the Conservatives are widely believed to be considering, would bring in £4.5billion for each one per cent rise, which would be "a useful contribution" although potentially politically damaging.
Figures in the leaked papers point to cuts of almost 10 per cent over four years to 2014. Other Treasury projections reveal tax receipts are unlikely to bounce up soon, despite the Government's hopes that the economy is finally returning to growth. Income tax receipts are set to tumble by £24 billion next year and the year after, then by £25 billion and then by £27 billion in 2013/14.
Shadow Chief Secretary to the Treasury Philip Hammond said: "The tax revenues he thought he could rely on to fund his spending habit turned out to be an illusion and now the Treasury is admitting they won't recover any time soon."
Reader views (3)
I like the sound of Nobby Clark´s solution (above). It would work too. Won´t do though, Nobby. It would take guts to put that lot into effect and that´s something that the politicians of all three UK parties don´t have.
- Graham Rodhouse, Helmond, Netherlands
Scrap Trident, ID cards and the Olympics. That's £60bn off the bat.
Remove 10% of the civil service staff - that's another £6bn per year.
Make the remainder pay for their own pensions if they want a final salary scheme. £10bn in the bank.
The remaining £14bn will come from shrinking the size and layers of government: let the devolved parliaments get on and govern themselves and not have shadow Westminster MPs anymore. Get rid of quangos and duplicate departments (Treasury AND Secretary to the Treasury? a:gender? Potato Council?)
There you go. Mr Cameron, you can contact me via The Standard.
- Nobby Clark, Perth, the Scottish one
Could try Browns policy,spend,spend,spend.
- Dave, london
