£3.5bn real terms cuts to unprotected budgets after 2020
Analysis from the New Economics Foundation shows that unprotected budgets will still face cuts after 2020 despite austerity “coming to an end”
30 October 2018
At yesterday’s budget the Chancellor continued to claim that austerity was coming to an end but new analysis from the New Economics Foundation shows that there will be cuts of almost £3.5bn (5.2%) to unprotected budgets after 2020, amounting to 6.2% per head (between 2020/21 – 2022/23 — ie. between now and the next scheduled election).
The services affected will be those that have already faced cuts under almost a decade of austerity and will continue to face cuts. For example, unless further protections are announced, prisons will now face a further cut of £510m between 2018/19 – 2022/23 on top of the 21% cut between 2009/10 and non-NHS health spending will be cut by £220m between 2018/19 – 2022/23.
Even in departments with excepted protections there will be cuts per head, for example on schools — assuming protection is maintained in real terms — the schools resource funding announced at the budget yesterday will still amount to a 2.6% cut per pupil (2018/19 – 2022/23).
Sarah Arnold, Economist at New Economics Foundation, said:
“Yesterday’s Budget did the bare minimum to ‘end’ austerity – our analysis shows unprotected departments are still facing cuts after almost a decade of damaging policy. Ending austerity will require a far more radical plan for public spending, especially as the twin armies of climate and technological change march rapidly on our economy — and this budget barely paid lip service to future challenges.
“Instead of using the fiscal headroom available within the Government’s own rules to undo some of this damage, the Chancellor has been fiscally irresponsible and given tax cuts that disproportionately benefit the highest earners.
“We need to rip up the rulebook that puts arbitrary targets ahead of real lives and considers the environment an afterthought. It’s our economy, and we can change the rules so that they work for people and the planet.”
Contact
Sofie Jenkinson, sofie.jenkinson@neweconomics.org 07981023031
Notes to Editors
Our analysis shows that there will be a real terms cut of 5.2% (£3.47bn) to unprotected budgets after 2020, amounting to 6.2% per head (between 2020/21 – 2022/23 ie. between now and next election).
Our previous work can be found here: Austerity by stealth? The Chancellor’s options for the next Spending Review is available at https://neweconomics.org/2018/09/austerity-by-stealth.
The model used in this analysis was built by NEF to look at UK departmental spending, consistent with UK Treasury accounting and OBR forecasting data. We have updated the model with the latest figures following the budget.
NEF’s model adopts the OBR projection for total resource DEL. To simulate individual department and sub-department budgets within DEL, we roll forward all current major ‘protections’ from the current plans (including: defense, foreign aid, schools, and the NHS) into the next spending review period, taking the latest government plans announced in the budget for 2019/20 as our baseline. We have also preserved an allowance for government reserves, as a provision for additional pension costs as a result of the pensions revaluation process, as provided for in 2019/20. Devolved and non-protected budgets are then projected forward, also from respective 2019/20 baselines, using an equation that allocates remaining funding within total DEL such that both the overall spending envelope isn’t breached but that the Barnet Formula is satisfied with respect to all relevant department budgets.
Cuts to non-protected, non-devolved departments have been estimated by assuming that the overall squeeze on spending estimated impacts smaller budgets in proportion to their size. Figures are presented in 2018/19 prices, and rounded to the nearest £10m.
