Government departments not responsible for the NHS, defence or overseas aid should expect further cuts following this year’s spending review, the Institute for Fiscal Studies has warned.
The NHS, defence and overseas aid spending has been protected from cuts since 2010. In a briefing note, published this morning, the institute said the chancellor would need to find an extra £2.2bn between 2019-20 and 2023-24 to avoid real terms cuts to unprotected spending overall, or £5bn to avoid spending falling in per capita terms.
However, provisional spending plans, including a commitment to provide the NHS with an extra £20.5bn by 2023-24 means the path for around half of day-to-day public service spending over the period has already been decided.
Research economist Ben Zaranko, one of the report’s authors, said: “Even though the latest plans have overall day-to-day spending increasing over that time, these increases wouldn’t be enough even to cover the NHS commitment in full. This suggests yet more years of austerity for many public services – albeit at a much slower pace than the last nine years.”
The briefing note said going forward cuts would likely average 0.4% a year, compared to 3% a year since 2010.
The institute said “on the basis of best practice” it expected the government to publish the overall spending envelope before the summer, which would determine how tight the settlements would be for unprotected departments.
Mr Zarenko said the “most important announcement” in the forthcoming spring statement could be what period the spending review will cover.
Last week local government minister Rishi Sunak told LGC he would be pushing for a longer-term deal.
Richard Watts (Lab) chair of the Local Government Association’s resources board, said: “Local government in England faces an overall funding gap of £8 billion by 2025. The spending review will therefore be make or break for vital local services and securing the financial sustainability of councils must be the top priority.
“If the government fails to adequately fund local government in the Spending Review then there is a real risk to the future financial viability of some services and councils.
“Councils were at the front of the queue when austerity started so local services should be at the front of the queue if it is coming to an end.”