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Darling 'must find £15bn in cuts' Public sector cuts 'total £36bn'
(about 2 hours later)
The government has not revealed the full extent of cuts needed to pay off the UK's debts, experts have warned. Chancellor Alistair Darling has not revealed all the cuts needed to cut the the UK's deficit, experts have warned.
Public spending is facing a £36bn squeeze from 2011 - with £15bn of the cuts needed yet to be identified, the Institute for Fiscal Studies has said.Public spending is facing a £36bn squeeze from 2011 - with £15bn of the cuts needed yet to be identified, the Institute for Fiscal Studies has said.
With health and education protected, the axe would fall on defence, housing, transport and higher education.With health and education protected, the axe would fall on defence, housing, transport and higher education.
The IFS also estimates the cost to families of paying back the national debt is £2,400 over eight years. Justice Secretary Jack Straw said the IFS had not taken into account savings the government has already made.
The think tank says the government will have to cut 6.4% per year between 2011 and 2014 in order to protect schools, hospitals and increase overseas aid. He told the BBC News Channel: "We've already spent £4bn less on unemployment benefits and income support for the unemployed than was anticipated."
It also warns that debt levels could remain high "for a generation" - at around 60% of national output - without policies to tackle the impact of the ageing population on the UK's public finances. And he said the government hoped to make further savings by "moderating the rate of increase of unemployment".
BBC Economics Editor Stephanie Flanders said the IFS analysis also suggested the tax rises in the pre-Budget report would "overwhelmingly" impact on the top 10% of earners. 'Severe cuts'
But Philip Hammond, for the Conservatives, said the IFS report "underlines the fact that the PBR yesterday was a political statement designed for electioneering purposes rather than to address the real needs of the country".
Because they are not discussing priorities openly a great deal of damage is being done Vince Cable, Lib Dem Treasury spokesman Nick Robinson on the IFS report Darling denies pre-election 'con'
In its report, the IFS estimates the cost to families of paying back the national debt is £2,400 a year for eight years.
This would come from tax increases, such as the 0.5% rise in National Insurance from 2011 announced by Mr Darling in his pre-Budget report on Wednesday, and the impact of spending cuts.
The IFS says whichever party wins the next general election will have to cut 6.4% per year between 2011 and 2014 if they want to protect schools, hospitals and increase overseas aid, as both Labour and the Conservatives say they do.
The think tank predicted "severe cuts" elsewhere, of the kind not seen in Britain since the late 1970s, potentially across departments such as housing, transport, higher education and even defence.
The clampdown could even mean that all of Labour's increase in public spending since it came to power could be unwound by 2018, the experts warned.
The IFS also estimated that Mr Darling only had a 25% chance of complying with the government's own Fiscal Responsibility Bill, compelling it to halve Britain's record £178bn budget deficit in four years.
But they were also critical of Conservative plans to tackle the deficit, saying it had a 16% chance of success.
Of the £36bn in public spending cuts needed, the IFS said £12bn will come from efficiency savings - although it warns that the government has fallen short of its previous targets for efficiency savings - and £3.4bn will come from the public sector pay cap announced in Wednesday's pre-Budget report.
Union anger
A further £1bn will come from cuts to public sector pensions and £5bn from already announced scaling back of spending programmes like IT, legal aid and prison management.
That would leave £15bn of unidentified cuts.
The IFS also warns that debt levels could remain high "for a generation" - at around 60% of national output - without policies to tackle the impact of the ageing population on the UK's public finances.
Lib Dem Treasury spokesman Vince Cable, who argues that no areas of public spending should be off limits when it comes to cuts, called for a "proper debate" on where the axe should fall.
"Because they are not discussing priorities openly a great deal of damage is being done," he told the BBC News channel.
TUC General Secretary Brendan Barber called for "radical new thinking" to avoid cuts to services and warned of possible industrial action over the "unfair" public sector pay freeze.
He said there should be a "fairer contribution from the wealthiest" to help pay off Britain's debts.
But BBC Economics Editor Stephanie Flanders said the IFS analysis also suggested the tax rises in the pre-Budget report would "overwhelmingly" impact on the top 10% of earners.
"Their income, if nothing else changes, will be cut by 5% by 2012," she added."Their income, if nothing else changes, will be cut by 5% by 2012," she added.