A new age of austerity may be dawning

Leading expert accuses the Conservatives and Labour of a ‘conspiracy of silence’ over public spending

If anyone had a spring in their step after Chancellor Jeremy Hunt’s Budget, the effect was surely brief. Expert analysis of the measures should bring even the most loyal of Conservatives back to earth with a crash.

But Labour supporters have few reasons to rejoice. The state of the economy and government finances looks bleak with high taxes, rundown public services, and the prospect of massive reductions in government spending to come.

Paul Johnson, of the respected Institute of Fiscal Studies, accused the Conservatives and Labour of a “conspiracy of silence” about potential cuts after the general election. However, given the problems in the NHS, social care, local authorities, the justice system and education, he questioned where any cuts could “really, credibly come from”, warning of difficult choices ahead. Politicians and the public “could be in for a rude awakening when those choices become unavoidable”.

Johnson also criticised Hunt for balancing the books to allow the 2p National Insurance cut by using changes to the non-dom regime and the oil-and-gas windfall levy, given the revenues from these future measures could only be estimated. “We got some immediate, definite, tax cuts part paid for by a smorgasbord of future, uncertain tax rises,” Johnson said.

The Resolution Foundation's chief executive Torsten Bell struck a similar note, saying the Chancellor would fail to meet three of the four sets of fiscal rules used by his Conservative predecessors since 2010 and even claiming Hunt had “continued to throw fiscal caution to the wind”. This sounds like distinctly bad news for the next government.

Scotland’s finances and public services are already in a serious mess and, given the troubles on the horizon for Westminster will have knock-on effects for Holyrood, the situation here could be about to get even worse. Doubtless, we can expect this to prompt further outrage from blundering SNP ministers.

If we are facing a new age of austerity, as some now fear, the Chancellor’s much-trumpeted National Insurance cut – offset by tax increases elsewhere – will soon feel like decidedly small beer.