Time to Get Real - How to tackle the deficit in a coalition government: a joint briefing by the IFS and IfG

The realities of doing a major consolidation with a coalition government present bigger challenges but also offer great opportunities for more collegiate and collaborative government.

Coalitions provide effective government in other countries - and have even done large scale consolidations. The seminar built in earlier IfG work on Making Minority Government Work and Undertaking a Fiscal Consolidation.

To help get the fiscal consolidation right first time, the speakers recommended:

• More transparency: base forecasts on central assumptions and be clear about the risks. New Office of Budget Responsibility has a key role to play here
• Wider scope: spending review should consider welfare spending alongside public service spending and bring most inside new control total
• Longer duration: spending review covering whole Parliament would aid credibility, with review at half-way stage to revise in light of developments - and show intent behind commitment to govern for the long-term
• Robust dispute resolution procedures within the coalition, while recognising the centrality of good relationships to making the coalition work
• Deeper collaboration within government, and between levels of government: successful coalition will force this, which is far more likely to succeed. A more strategic, transparent and collegiate approach to tax policy will be needed as well
• More engagement - of public sector employees at all levels and of the public in how to make reductions - and the need to use the consolidation to break down traditional silos and ways of doing government which get in the way of delivering public services more efficiently.

The process is fraught and could be blown off course at any time.  Many governments have had to have a number of bites at the cherry to get the fiscal consolidation right.

But a new government facing immense challenges is a huge opportunity to develop a whole new way of governing and offers a real prospect of securing a successful fiscal consolidation.

Listen to the presentations

UK public finances: fiscal repair needed (Carl Emmerson, IfS)

• Podcast (13m 10s - MP3, 12MB) 
• Presentation slides (PDF, 531KB)

Coalition Government: [How] does it work? (Akash Paun, IfG)

• Podcast (11m 55s - MP3, 10.9MB)
• Presentation slides (PDF, 462KB)

A credible consolidation: What changes with a coalition? (Julian McCrae, IfG)

• Podcast (20m 57s - MP3, 19.1MB)
• Presentation slides (Powerpoint, 3.0MB)

Media coverage

• Public Finance: IFS predicts 25% cut in department budgets
• The Guardian (editorial): Public expenditure: Shock therapy
• The Times: Benefits to be cut as coalition looks for '£12bn in savings' from welfare budget
• FT Westminster Blog: Tory Cabinet Ministers responsible for 90% of spending
• The Guardian: Will the Liberal Democrats survive the coalition?

Contacts

• Julian McCrae (Institute for Government)
• Carl Emmerson (Institute for Fiscal Studies)