The Chancellor's spending freeze will mean schools and hospitals will be forced to make £11bn of cuts, it's been reported. Kwasi Kwarteng has rejected calls to protect their budgets during increasing inflation.
But sticking to the promises made for spending in 2021 doesn't take into account a 10% price rise being seen this year, say experts. Public services have been living under austerity for many years and are widely described as "stretched".
But Mr Kwarteng said this week it was vital to “stick within the envelope of the CSR [the Comprehensive Spending Review]”. The Institute for Fiscal Studies had warned previously that an extra £18bnwould need to be found to meet “the real-terms generosity intended” by the 2021 programme, reports the Independent.
Now, the IFS says key services will have to make savings, with health and social care needing £7.5bn, education £3.4bn, the home office £0.7bn, justice £1.4bn and defence £1.4bn.
“That will pose obvious challenges for stretched public services,” Ben Zaranko, a senior research economist at the IFS, told The Independent.
The local government minister Paul Scully told the Local Government Chronicle that there is “fat to be trimmed” from town hall budgets.
“To be fair, the spending review provided a generous settlement [for councils]. So there is fat to be trimmed. I know that is a moral dilemma, but I think there is fat to be trimmed in all areas. It’s a case of moving things around a bit. There are a number of councils who have a Covid overspend.”
The 2021 plans took a 4% inflation into account. However, the autumn could see it rise to 11%, and remain there for the future. This means that there is little change in sight for the record NHS patient backlog, cuts to school spending, social care crisis and delays in the justice system.
Mr Zaranko told The Independent: “Higher inflation makes the government’s plans for public service spending less generous than they were originally intended to be. Next year, overall departmental funding will be about £18bn lower in real, inflation-adjusted terms than under the government’s original plans.
“That’s how much the chancellor would need to top up his plans by to compensate. If, as seems likely, no such funding is forthcoming, departments will have to absorb these cost pressures from within existing budgets.”
Labour treasury spokesperson Tulip Siddiq said: “Public services are already struggling after 12 years of low growth and austerity under the Tories. They should be looking instead to not just reverse their budget but their whole discredited trickle-down economic strategy.”
