Chancellor Philip Hammond will fail to end austerity as he pledged in October unless he ploughs an extra £5bn into Whitehall spending by 2023-24, a new report reveals.
An analysis from the Institute for Fiscal Studies (IFS) think tank today (February 11) found that despite a boost to NHS spending, international aid and defence, the chancellor’s spending commitments failed to protect local councils and other government departments that have historically been worst battered by austerity cuts.
The think tank found that Hammond would need to find an extra £2.2bn by in the next 5 years to protect budgets from inflation – but this figure must rise to £5bn to maintain services against a backdrop of a rising population.
An eye-watering £11bn would be needed to maintain spending on unprotected services as a share of national income.
The IFS report comes just weeks before the chancellor’s anticipated spring statement, due to be delivered on March 13.
Hammond had pledged to ‘end austerity’ in his previous autumn statement after higher-than-expected tax revenues as well as a change to his fiscal rule that allowed the government to spend more.
But sluggish economic growth in the last few months coupled with ongoing Brexit uncertainty is likely to prompt the Office for Budget Responsibility (OBR) to downgrade government tax revenues, which will in turn put even greater pressure on Hammond to end austerity policies that have now dragged into their tenth year.
Shadow chancellor John McDonnell called on Hammond to keep his pledge to end austerity.
“Nine years of brutal Tory austerity have wounded our public services and the whole country which relies on them,” he said. “The chancellor has promised a ‘Brexit bonus’ and any failure to deliver it at the spring statement will be yet more evidence of the Tories’ failure to negotiate a Brexit deal that benefits jobs and the economy.”
Unite assistant general secretary Steve Turner agreed.
“Unite didn’t believe it when the Hammond claimed an end to austerity in the autumn statement and we certainly don’t believe it now,” he said.
“As this latest report from the IFS shows, austerity is far from over for those suffering its impact at home, in the community or in the pocket,” Turner added. “From schools to social care, policing to health and welfare support, vital public services are at breaking point.
“What we need from the Chancellor and this Tory government is action, not sound bites or accounting tricks. People are suffering in the cruellest ways as cuts bite deeper into vital service provisions and if they won’t end the pain, they should make way for a Labour government that will,” he went on to say. “Only Labour will deliver on its promises with a public investment programme to revive our starved public services, create decent jobs, build necessary homes and revitalise forgotten communities.”