Future threat to public services

The Financial Times reports that cuts in public services are on the cards for 2011 as the government plans to boost short term spending.

Alistair Darling has made clear that he will not cut spending now as the economy slows to recession, but will try to bring forward capital spending and "reprioritise" current expenditure on areas that support the economy or protect people from the downturn.

As the £115 million a week net Britain hands to the audit-failing EU falls into neither of these priority categories, when will Mr Darling be heading to Brussels to break the bad news that their huge weekly cheque has been "reprioritised"?

A range of government departments including Work & Pensions, Revenue & Customs, the Ministry of Defence and the Foreign Office already face sharp real-term cuts in their budgets.

Latest spending plans squeezed virtually all government departments to protect health, education and law & order, which themselves received lower rises than in previous years.

However it will be beyond 2010 - after the next general election - when the real pain will be felt.

"What has happened recently will leave a permanent scar on the economy," said Ray Barrell of the National Institute of Economic and Social Research.

"After the dust has settled, all governments will have to give serious thought to the level of public services that they want."

However not all the pain may be taken by public services. Some of it could well come from tax rises.

In the current economic turmoil, the billions of pounds a year Britain lavishes on the wasteful and fraud-ridden EU is looking less and less sustainable. As public finances tighten, the government needs to act urgently to redirect these huge amounts to more productive purposes.