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Last updated: April 25, 2010 5:01 pm

UK deficit-buster: Choose your cuts

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Britain’s next chancellor will oversee the start of the most sustained squeeze on public spending in at least 60 years. Without huge tax rises, government departments will have to cut around £37bn from their budgets by 2013-14. Yet all three main parties refuse to explain how at least £30bn of these savings will be found.

To illustrate the scale of the challenge, the Financial Times has simulated the next three-year spending review, highlighting the type of decisions the next chancellor will face if taxation stays on the same path.

In the game, you can chose to match the Conservative, Labour or Liberal Democrat pledges to protect certain areas of spending. Alternatively you can opt to be a chancellor free of party constraints. To make the exercise simpler, we’ve excluded party proposals to cut spending, showing only the total amount of savings each party must find. It also assumes any proposed tax changes are adequately funded.

This graphic represents an admittedly rough guide to the next spending review. But it does reflect what is broadly being discussed, behind the scenes, in Westminster and Whitehall, and the unpalatability of the choices ahead. It is a debate that has, so far, been strangely absent from the election campaign.

A note on the graphic:

The game is designed merely to be indicative. To keep it manageable, each of the 32 examples saves at least £1bn of spending. In practice, many smaller cuts are available. Scrapping the child trust fund or educational maintenance allowances, would each save around £500m a year. Some options currently being debated – for example scaling back Trident – are longer term. They do not save enough over the three year period to be included. Many of the savings are England only, given that a range of activities, including health and education, are devolved responsibilities. And there are, of course, many other options for cuts big and small, many of which are even more unattractive to politicians.

The FT estimates for savings are only approximate. Some options involve redundancies that would have costs, so the total savings could be lower. Others have been ruled out by certain parties.

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