‘Households face £26bn of fiscal pain in 2016-18’


If the current timetable for deficit reduction is maintained, households should brace themselves for roughly another £26bn of fiscal pain in the years between 2016 and 2018 – whether it comes in the form of extra cuts to public services, another big hit to welfare or new tax-rises.

The much hyped “AME [Annually Managed Expenditure] cap” sounds more like an aspiration for limiting welfare spending rather than any sort of firm ceiling. If the cap were to bite – and therefore reduce levels of spending compared to what would otherwise have happened – then it would be almost bound to pose a major and last minute challenge to the government’s flagship universal credit reform which encompasses the key benefits that are in the firing line. Alternatively, it’s just a way of saying that the Office for Budget Responsibility is now going to be invited to more closely monitor the pressures on welfare spending.

Today was all about continuing with the current plan. The biggest decisions will be made immediately after the election.

This post originally appeared on The Guardian’s Spending review 2013: panel verdict