IFS predicts 12% spending cuts

Most public sector executives will face budgetary constraints of at least 12 per cent in the next two years, according to a new report.

The Institute of Fiscal Studies (IFS) has analysed chancellor Alistair Darling's pre-budget report and claimed that efforts to protect health, schools, early years and overseas aid budgets will leave the rest of the public sector facing cuts of £25.5 billion.

The thinktank claimed that these constraints, which will slash investment by 20 per cent until 2013- 2014, will remove the spending increases witnessed in the second and third Labour governments, the Local Government Chronicle.

Robert Chote, Director of the IFS, explained that the government could have reduced spending by a greater amount if they had decided to repair the public finances.

He told the news provider: "The chancellor has always had a balancing act to accomplish between supporting the economic recovery and repairing the public finances."

The "unprecedented" funding squeeze facing public sector executives was highlighted in a report produced by the Chartered Institute of Public Finance and Accountancy and the Society of Local Authority Chief Executives and Senior Managers yesterday (December 10th).

To counter this, the study suggested that executives should consider altering the leadership structures of organisations to enable front-line staff to make more independent decisions.