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Public sector to see 'challenging' falls in staff

Public sector workforce will be "challenging" according to the Institute for Fiscal Studies, with worker numbers outside of the NHS and schools likely to fall between 30 to 40 percent in the next five years.

The public sector workforce grew by over 600,000 over the 2000s. Even so the scale of the reductions expected over the next few years looks challenging.

If delivered, the 1.1 million drop in general government employment forecast by the OBR between 2010/11 and 2018/19 would be almost three times larger than the previous drop during the early 1990s.

The workforce is a useful prism through which to look at the effects of cutting total spending whilst protecting the NHS and schools budgets from cuts.

– Jonathan Cribb, research economist at IFS

Public sector areas 'face a 40% cut in workforce'

The public sector outside of the NHS and schools faces a "very challenging" 40 percent cut in its workforce over the next five years if those areas continue to be protected by Government, a new report by the Institute for Fiscal Studies has warned.

Independent forecasts released by the Office for Budget Responsibility in December predicted a 1.1 million reduction in general government employment between 2010/11 and 2018/19 as a result of austerity measures.

The IFS report found that this would be the biggest cut in the public sector workforce for more than half a century, "dwarfing" cuts of 350,000 seen in the early 1990s and "dramatically changing the nature of the UK labour market".

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Warning of 'hugely challenging' cuts in public services

George Osborne's planned cuts to public services aim to return the nation's finances to surplus by 2018/19. Credit: Oli Scarff/PA Wire

The impact of the Government's planned cuts in public services after the next election will be "hugely challenging", a leading economic thinktank has said, warning against a "false sense that all is now well".

The Institute for Fiscal Studies railed against overconfidence after a return to healthy growth in the economy, saying 60% of Chancellor George Osborne's cuts are still due to take effect from next year.

However, figures from Oxford Economics predicted 2.6% growth in GDP this year, raising the prospect that continued growth could remove the need for Mr Osborne's austerity plans to be implemented in full.

IFS: Govt's figures 'do not reflect household incomes'

The Institute for Fiscal Studies (IFS) said the Government's figures on take home pay do not reflect what has happened to household incomes overall.

IFS director Paul Johnson told BBC Radio 4's Today programme that although the Government used "a perfectly sensible set of numbers", there were "two problems" that need to be taken into account.

An analysis of take home pay figures circulated by the Treasury has suggested all but the top 10% of earners saw a rise last year. Credit: Lynne Cameron/PA Wire

He said: "First, we have other sets of data - the Office for National Statistics publishes an average weekly earnings index. That went up quite a lot less quickly than inflation in the most recent months.

"And of course they are not taking account of reductions in things like benefits which were occurring over the time. So if you are looking at household incomes, that will be different from what's happened to take home pay."

IFS: Govt's books improved more by cuts than tax rises

The Institute for Fiscal Studies (IFS) has presented its analysis of Chancellor George Osborne's Autumn Statement.

ITV News economics editor Richard Edgar reports:

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Single carbon price 'should replace green policies'

The Government should impose a single carbon price to reduce both carbon emissions and "fuel poverty", according to a new report by the Institute of Fiscal Studies.

The Government should switch to a uniform carbon price to reduce emissions says the Institute of Fiscal Studies. Credit: PA

The IFS said that a multitude of policies aimed at reducing emissions have actually increased energy prices, and a uniform cost would help the Government to meet emission reduction targets at no additional cost, and without lower income households being made worse off.

IFS issues tax rise warning despite Osborne's cuts

The Government could be forced to raise £6 billion in new taxes after the 2015 General Election despite the Chancellor's latest round of spending cuts, experts have warned.

The Institute for Fiscal Studies (IFS) said that, despite the £11.5 billion worth of reductions for 2015/16 set out by George Osborne, savings of a similar magnitude had already been pencilled in for the following two years.

Chancellor George Osborne revealed details of the Government's spending plans to Parliament yesterday. Credit: Andrew Milligan/PA Wire

IFS director Paul Johnson said there would have to be a "serious debate" on whether fiscal retrenchment on such a scale could be achieved through more spending cuts alone, or whether taxes would have to rise as well.

He said: "At almost any other moment in the past 60 years, announcements of spending cuts of this scale would have created a storm.

"Returning to an 80/20 split for the consolidation as a whole would mean a £6 billion tax increase in the next Parliament. Coincidentally this is pretty close to the average tax increase seen in post-election budgets in recent decades".