Monday, February 27, 2023
Those hidden public service cuts
The Guardian reports on claims by thinktank, the New Economics Foundation that Rishi Sunak’s government is hiding £28bn of “stealth cuts” to public services over the next five years.
They say that the report by the leftwing thinktank, shows that Hunt’s spending plans outlined at the autumn statement in November included cuts to public services worth £1,000 a household by 2027-28:
Hunt promised in the autumn statement to increase spending by 1% a year after inflation. However, this was underpinned by Office for Budget Responsibility forecasts, which had assumed inflation would fall below zero.
The thinktank said this was unlikely to happen because the Bank of England would be expected to intervene to keep inflation close to its 2% target rate. NEF said that if inflation remained close to 2%, this would imply real-terms cuts – not growth – to spending worth £28bn.
Alfie Stirling, the chief economist and director of research at NEF, said the government was “exploiting a curious feature of the OBR’s forecast” to make its promise. “It allowed the chancellor to play smoke and mirrors with the future of public services last autumn,” he said.
“There is no serious or credible justification for the government’s current plans. Consecutive UK chancellors have already put the country through a decade of austerity, which means we know exactly how it ends: near-stagnant earnings growth, threadbare public safety nets and the first stall in life expectancy on modern record.”
If this is true the next budget will worth keeping an eye on.
They say that the report by the leftwing thinktank, shows that Hunt’s spending plans outlined at the autumn statement in November included cuts to public services worth £1,000 a household by 2027-28:
Hunt promised in the autumn statement to increase spending by 1% a year after inflation. However, this was underpinned by Office for Budget Responsibility forecasts, which had assumed inflation would fall below zero.
The thinktank said this was unlikely to happen because the Bank of England would be expected to intervene to keep inflation close to its 2% target rate. NEF said that if inflation remained close to 2%, this would imply real-terms cuts – not growth – to spending worth £28bn.
Alfie Stirling, the chief economist and director of research at NEF, said the government was “exploiting a curious feature of the OBR’s forecast” to make its promise. “It allowed the chancellor to play smoke and mirrors with the future of public services last autumn,” he said.
“There is no serious or credible justification for the government’s current plans. Consecutive UK chancellors have already put the country through a decade of austerity, which means we know exactly how it ends: near-stagnant earnings growth, threadbare public safety nets and the first stall in life expectancy on modern record.”
If this is true the next budget will worth keeping an eye on.
