Magazine article Public Finance

A Tough Ascent

Magazine article Public Finance

A Tough Ascent

Article excerpt

Boiler makers and bingo players enjoyed Alistair Darling's third, and probably last. Pre-Budget Report this week. Bankers and public sector 'bureaucrats' were less impressed.

More than ever, the politics took precedence over the economics. It was important to bash the bankers and send out a signal to apparently well paid and well pensioned public sen-ants.

So the senior civil service faces a pay hill reduction of £100m within three years, government contributions to public pensions will be cut by £lbn a year from 2012 and pay rises across the sector will be capped at 1% for two years from 2011.

Of course, the consequent savings will be a drop in the ocean compared with this year's expected deficit of £178bn. Darling did offer some additional efficiencies, but there is still a mountain to climb.

With funding protected for hospitals. schools and the police, other public services will inevitably suffer. A report published this week by CIPFA and council chief executives' body Solace suggested that individual services could face annual cuts of up to 10%.

Darling was at pains to show that the deficit will be tackled. On the day of the PBR. he published the Fiscal Responsibility Bill. which commits the government to halving the borrowing requirement over four years. …

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