Austerity to continue unless Hammond finds extra cash

Austerity will not be so easy to bring to an end says the IFS
Austerity will not be so easy to bring to an end says the IFS

Philip Hammond will have to spend billions of pounds extra if he truly wants to end austerity, an economic think tank has said.

In order to simply maintain current per capita levels of day-to-day spending across Whitehall departments which do not have ring-fenced budgets, the Chancellor would have to find an extra £5bn a year by 2023-24, the Institute for Fiscal Studies (IFS) said.

In an analysis of the choices facing the Chancellor in this year’s spending review, the IFS said Mr Hammond would need to spend £11bn to avoid it falling as a share of national income.

The IFS said spending increases already promised by the Chancellor would be swallowed up by commitments to fund the NHS, defence and international aid - potentially meaning cuts to other areas.

“The provisional totals set out in the Autumn Budget imply that day-to-day public service spending will increase by 6.1% (£18.2bn) between 2018?19 and 2023?24,” the IFS report said.

“This would outstrip population growth, putting per capita spending on an upward trend.

“But this would not be enough to meet the cost of the Government’s existing spending commitments on the NHS, defence and overseas aid while avoiding cuts elsewhere.

“Other ‘unprotected’ areas are therefore, on current plans, facing further budget cuts of around 0.4% per year in real terms between 2019?20 and 2023?24, and cuts of 0.9% per year in per capita spending.”