Public service cuts ‘will feel like a return to austerity’

Extra £4bn reduction in spending likely to squeeze prisons, local councils and police, economists say

RISHI SUNAK has slashed an extra £4billion a year from day-to-day spending on public services from next year, prompting warnings of a return to austerity for prisons and local government. The Chancellor’s latest move comes on top of cuts he made at the spending review last November, when he slashed £10 billion per year from departmental budgets from this year onwards.

Economists and Labour MPS warned the new reduction unveiled in the Budget was likely to squeeze the Ministry of Justice and local councils, as well as an array of other departments.

Only the NHS, schools and the Ministry of Defence enjoy protected budgets, having been awarded multi-year government funding settlements that were set out in cash terms.

This means other departments could need to absorb reductions in spending at the spending review this autumn.

The Office for Budget Responsibility (OBR), the Treasury’s independent forecaster, warned that by cutting more than £15 billion a year from department resource spending from 2022-23 onwards, the coming spending review would be “challenging”.

The OBR also highlighted that the Government’s spending plans “make no explicit provision for virus-related costs beyond 2021-22” such as annual vaccination programmes.

Treasury insiders insisted the change in the spending assumptions for each year of this parliament from 2022 was a “mechanical adjustment” that reflected a change in inflation forecasts.

Ben Zaranko, research economist at the Institute for Fiscal Studies, said: “It’s going to be extremely tough. These aren’t the big cuts we did after 2010 but they’re certainly looking at a very tight settlement.

“For some departments, they could be looking at another round of cuts, which would feel very much like a return to austerity.”

He warned that local government, the Home Office, the Ministry of Justice and the Department for Environment, Food & Rural Affairs in particular were “facing big pressures around postbrexit responsibilities”.

Torsten Bell, chief executive of centre-left think tank Resolution Foundation, said: “This definitely means tougher times for prisons and local government – basically anything outside of schools, hospitals and frigates.”

Labour called on Mr Sunak to “come clean” about where cuts could fall, warning local government, further education and police forces could be hit.

The party suggested that an average cut of 2.8 per cent in spending would be needed across departments other than the NHS, schools and defence to “make the Chancellor’s sums add up”.

Lucy Powell, shadow business minister, tweeted that public services had been “underfunded” and “forgotten”.