Cutting the deficit: There is an alternative

Article

The Spending Review on 20 October is certain to be one of the most significant political events of this Parliament. The country is braced for spending cuts on a scale without precedent in the post-war period.

Progressive economists believe the Coalition's plan for rapid and deep deficit reduction will put at risk the fragile economic recovery and undermine prospects for future growth and shared prosperity.

However, beyond simple protest, it is incumbent upon those who are critical of the Coalition government's plans to propose credible and costed alternatives. This briefing paper sets out to do just that.

In summary, ippr's alternative plan for deficit reduction states that the government should:

- Maintain investment on capital projects

- Reduce the underlying deficit more slowly

- Maintain a 65:35 ratio between spending cuts and taxes

- Accept that the 20% rate of VAT will not be reversed

- Tax universal benefits

- Lift the ring-fence on NHS spending.

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