Britain may be headed for a new period of Tory austerity, according to IFS analysis
Britain may be headed for a new period of Tory austerity, according to recent analysis of Rishi Sunak’s latest Budget.
Certain spending areas are facing an eight percent reduction in their budget compared with plans before the Covid pandemic, according to the Institute for Fiscal Studies (IFS).
After Chancellor Rishi Sunak’s Budget, the IFS found that public service spending is set to be about £14bn lower than it was before coronavirus, and around £5bn of this is lower spending on overseas aid. Certain departments, like the NHS and schools, are ringfenced, from spending cuts but many remain unprotected.
Those remaining will face a spending plan that’s £9bn lower that before the pandemic and if we take inflation into account that’s about a 7.5 percent cut in 2022-23.
The IFS calculated that Rishi Sunak’s spending plans did not fully take into account forecasted inflation rates or Barnett consequentials (if more is spent on schools in England this must be matched by top ups to the schools budget in Scotland). This leads to a deeper, multi-billion pound cut to public service spending.
The Treasury told The Guardian: “This is categorically not a return to austerity. We are significantly increasing public spending with a £72bn rise over this year and next – and forecasted rises in spending over the rest of this parliament.”
It added that it has not set departmental budgets for 2022 yet and insisted that anything which suggests there will be a return to Austerity is “misleading”.
After analysis of the Chancellor’s Budget, Ben Zaranko, a research economist from the IFS, said: “Plans can change but, as things stand, for many public services, the first half of the 2020s could feel like the austerity of the 2010s.”
Zaranko added that in some areas the “Chancellor’s spending plans are even tighter than they first appeared. This poses clear and obvious challenges, not least because of the new pressures created by the pandemic.”
The news has resulted in backlash from certain parties and groups, including the Scottish National Party (SNP) who said that Scotland’s future must now be in Scotland’s hands following the worrying potential of a return to austerity.
Commenting, the SNP’s Shadow Chancellor Alison Thewliss MP said: “Rather than kickstarting our economic recovery from the pandemic by heeding calls to bring forward a real financial package, the IFS has warned that the Chancellor’s plans actually signal a return to Tory austerity.
“With millions of households having their incomes slashed, businesses being pushed to the brink, people facing cliff-edge cuts to Universal Credit, and tax rises for millions of workers – the Tory government is putting the recovery of our NHS, the economy and countless jobs at needless risk.
“The warnings from the IFS make for grim reading – we have seen the scale of the damage caused by a decade of deep Tory austerity.
“Attempting to balance the books on the backs of millions of people already struggling to get by yet again highlights the choice of two futures facing the people of Scotland.
“The upcoming election in May is set to be one of the most important in Scotland’s history, and voters will face a stark choice – we can either suffer the long-term damage of Tory austerity cuts at Westminster, or instead grab the opportunity to protect our place in Europe and build a strong, fair and green recovery as an independent country.
“With both votes SNP we can put Scotland’s future in Scotland’s hands – not Boris Johnson’s.”
Prem Sikka, Emeritus Professor of Accounting at Essex University, said: “It has been permanent austerity for millions for more than a decade and most workers’ wages have been stagnated.
“Public sector wages have been frozen, nurses offered 1% and school kids going hungry. All this has been the outcome of deliberate government choices as it funnelled tax cuts to the rich and contracts to cronies.
“This month’s budget increased income tax, national insurance contributions and council tax for the masses. This is accompanied by massive price rises for gas, electricity, food and other essentials.
“Even the Tories should be able to see that you can’t level-up or build a sustainable economy by depleting the purchasing power of the masses.
“Then they don’t really want to see, do they?”
Lucy Skoulding is a freelance reporter at Left Foot Forward. Follow her on Twitter.
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