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Following this week’s Spending Review by Chancellor George Osborne, CIPFA presents its thoughts in a Briefing on how the announcements will impact key areas, such as health, housing and local government.
Commentators were quick to portray George Osborne as ‘pulling rabbits from the hat’, as he made his big ticket announcements, most notably the decision not to cut tax credits, protection for police and a local tax for social care funding. In a further welcome sign of devolution, we applaud the granting of the income tax levy to Wales without a referendum.
Many of these decisions could be made thanks to interest rates remaining low, improved forecasts for GDP and a number of tax and spending initiatives that, over the course of the current Parliament, will result in £6bn per year.
The above is reliant on the current growth forecast for the economy, and suggests the country is on track to eliminate the deficit with a £10bn surplus in 2019/20.
Rob Whiteman, Chief Executive of the Chartered Institute of Public Finance and Accountancy (CIPFA), says: “Now that the dust has begun to settle over the Chancellor’s Autumn Statement and we have had time to dig below the headline announcements, we have found a complex and concerning Spending Review for many public services.
“It is certainly true that the Chancellor is enjoying a lucky run in having significantly better than expected public finances to rely on in planning the next five years. And being able to borrow less and pay less interest is enormously helpful when you have some difficult issues to duck.
“However, the low hanging fruit of efficiency has already been picked, further savings will be much harder to reach. Economic forecasts look good now, but we are living in as unstable a world as we ever have been, and it wouldn't take much to tip the scales the wrong way.”
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