POLITICS
12/07/2013 13:16 BST

NHS, Pensions And Foreign Aid 'All Face Cuts' If George Osborne Refuses To Raise Taxes

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George Osborne, U.K. chancellor of the exchequer, leaves 11 Downing Street to testify at a Parliamentary Treasury Select Committee hearing on planned government spending in London, U.K., on Thursday, July 11, 2013. Osborne set out spending cuts for the 2015 election year last month, announcing 11.5 billion pounds of budget reductions. Photographer: Simon Dawson/Bloomberg via Getty Images

George Osborne's suggestion that he will not raise taxes after the next election could mean cuts to the NHS, pensions and foreign aid, a leading economist has warned.

Yesterday the chancellor told the Treasury committee the Conservative hope of cutting the deficit would be achieved "through spending consolidation" rather than tax rises.

And he later told reporters at a lunch in Westminster: "There is no need for tax rises to contribute to that fiscal consolidation".

David Cameron has made much of his decision to safeguard the NHS as well as pensions and development aid from the coalition's public spending cuts.

But Paul Johnson, the director of the Institute of Fiscal Studies told BBC Radio 4's Today programme on Friday morning that these ringfences would come under intense pressure if the chancellor ruled out tax rises.

"One of the difficulties that governments are in at the moment is that if you ringfence health and pensions ... that's a very, very large chunk of spending that is just out of the picture," he said.

"Therefore, everything else - if you are going to do it all through spending - has to be cut a lot. If you are going to do it all through spending that does put additional pressure on the ringfence."

He added: "The position whoever wins the next election is going to face is a really big additional consolidation, either further big spending cuts or some tax increases.

"The choice that is open is to continue with spending cuts such that a whole range of bits of public spending will end up being one-third lower than they were in 2010, or to do some of it through tax increases."

At a briefing for journalists following the chancellor's spending review, Johnson said Osborne would be forced to raise an extra £6bn in taxes after the 2015 election if he wanted to achieve a previously stated goal of a 80:20 split between spending cuts and tax rises.

However Osborne appears to have indicated he intends to pursue a 100:0 strategy.

Tory MP Charlie Elphicke told the BBC's Daily Politics programme today that he believed the ringfences would remain in place should the Tories win the next election.

On the NHS budget he said: "You have to have that ringfence n place to ensure the nation is kept healthy and well."

Cameron and Osborne have come under pressure from all sides over the protected departments. Lib Dem business secretary Vince Cable recently said the approach was an "unbalanced" way to run the government.

"It means that all future pressures then come on things like the army, the police, local government, skills and universities," he said in March.

"I went along with the overall ringfencing approach in this parliament – as part of the coalition we have had to work as a team – but I think as a long-term approach to government spending, it isn't very sensible."

And in the same month Liam Fox, Cameron's former defence secretary who is on the right of the Conservative Party, said: "We must also ask whether ringfencing departmental budgets makes sense in a period of prolonged austerity."