The impact of austerity policies on public services since 2010 has been devastating. The suppression of public sector pay has led to a recruitment and retention crisis, leading to a severe shortage of public service personnel. Cutting corners has left nine out of 10 schools in need of repairs, leaving the NHS with a £10bn repair backlog. The weakening of public services has also left us ill-prepared for a pandemic that has tragically killed more than 170,000 people and led to one of the highest excess deaths per capita in the world before a vaccine was rolled out. Now, in the midst of a cost of living crisis, public services are overwhelmed, underresourced and workers are underpaid: leading to the most significant strike action in a generation.
Against this backdrop, this briefing looks at the Autumn 2022 statement and analyzes the latest public service spending announcements in the context of the past decade of austerity and future economic projections. Even before the Autumn Statement, after adjusting for the effects of inflation and population growth, overall daily spending on public services (the Resource Sector Expenditure Limit, RDEL) in 2021/22 had fallen by 16.9% since 2009/10, Or £45.9bn in cash terms (unless otherwise stated, all GBP figures in this briefing have been converted to 2022/23 prices based on the Consumer Price Index (CPI).but with relatives of‘For the “protection” of budgets such as the NHS, schools and defence, cuts to many unprotected budgets and departments have been much steeper.
According to the latest fall statement, future plans tell an almost paradoxical tale of two halves. Over the next few years, real budgets will be squeezed as inflation erodes existing sectoral settlements, with real per capita spending falling from 11.1% of 2009/10 levels in 2022/23 to 12.4% in 2024/25 Then, from 2025/26, a new round of austerity is introduced, with cuts increasing to £20.1bn a year by 2027/28. But oddly enough, despite the new cuts, real per capita spending will stop falling and rise to just 8.7% below 2009/10 levels by 2027/28.
This briefing takes a closer look at the assumptions and projections in the autumn statement. It suggests that the true impact of the upcoming tightening may be underestimated by incredibly low inflation forecasts, with CPI well below the Bank of England’s target, or even turning negative. The new analysis in this paper shows that, assuming instead that banks fulfill their mandate and that inflation remains at 2% from mid-century onwards, this would imply cuts in real spending – not growth – to 2.0% between 2022/23 and Between 2027/28. In this more plausible inflation scenario, real spending on public services in 2027/28 would be £28bn below the government’s current forecast, £8.9bn below current spending and £24.9bn below 2009/10 levels GBP.
