Government 'hiding £28 billion cuts in smoke and mirrors budget' claim

27 February 2023 , 00:01

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Analysts warn that stealth cuts of 28 billion a year are on the horizon (Image: Ben Stansall/AP/REX/Shutterstock)

Rishi Sunak's government could be hiding stealth cuts of £28 BILLION a year to public services by 2028, startling new analysis shows.

The TUC has published a study by the New Economics Foundation (NEF), accusing the government of playing "smoke and mirrors" with its figures.

The NEF says that if inflation does not drop below 2%, cuts worth £1,000 per household will have to be made.

It added there "no serious or credible justification" for the government’s current plans.

It warns that Department of Health and Social Care budget will be slashed by an estimated £11.6billion, while the Department for Education will miss out on £4.9billion if Jeremy Hunt doubles down on his Autumn Statement.

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Alfie Stirling, chief economist and director of research at NEF, accused the government of "exploiting a curious feature" in forecasts by the Office for Budget Responsibility (OBR).

Jeremy Hunt has been urged to plough more cash into public services (AFP via Getty Images)

He said: "It allowed the chancellor to play smoke and mirrors with the future of public services last autumn, claiming that budgets would continue to rise in real terms, despite tens of billions a year in fresh cuts.

“There is no serious or credible justification for the government’s current plans."

The analysis found the OBR assumes inflation will fall below 2% from 2024/25 - but says if it does drop this far the Bank of England would maintain inflation at 2%.

The NEF said funding would be 14% lower in 2027/28 than when the Tories took power - with some departments seeing real-terms spending fall by two thirds since then.

The TUC has called on Chancellor Mr Hunt to cancel billions of pounds of public service cuts and offer inflation-matching inflation to public sector workers.

It also wants to see a recruitment drive to end staff shortages in public services, along with fully-funded plans for a strategy to deliver "world class" services.

The NEF predicts the Bank of England would hold inflation at 2% (AFP via Getty Images)

TUC General Secretary Paul Nowak said: “With a recession already expected this year, a new round of austerity would make a bad situation worse. The Chancellor should instead use the power of government to lift us up and out of Britain’s economic slump.

“A budget boost to public services – including staff pay – can keep us out of recession this year. And it can lay the foundations for a stronger economy in the years ahead – world class schools, hospitals without waiting lists, funded childcare, and modern transport systems.”

An HM Treasury spokesperson said: “It is vital we stick to our plan to halve inflation this year and reduce debt, laying the foundations for long-term economic growth and prosperity to support investment in our public services.

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“Total departmental spending will continue to grow in real terms over the Spending Review period. The Efficiency and Savings Review announced at the Autumn Statement will help departments manage pressures where necessary.”

Dave Burke