A report by the New Economics Foundation (NEF), a thinktank, showed that spending plans outlined at the autumn statement in November included cuts to public services worth £1,000 a household by 2027-28.
It warned that Rishi Sunak’s government is hiding £28bn of “stealth cuts” to public services over the next five years.
In the autumn statement, the government promised to increase spending by 1% a year after inflation. However, this was underpinned by Office for Budget Responsibility forecasts, which had assumed inflation would fall below zero.
The thinktank said this was unlikely to happen because the Bank of England would be expected to intervene to keep inflation close to its 2% target rate. NEF said that if inflation remained close to 2%, this would imply real-terms cuts – not growth – to spending worth £28bn.
NEF said that if inflation remained close to 2%, this would imply real-terms cuts – not growth – to spending worth £28bn.
Alfie Stirling, the chief economist and director of research at NEF, said the government was “exploiting a curious feature of the OBR’s forecast” to make its promise. “It allowed the chancellor to play smoke and mirrors with the future of public services last autumn,” he said.
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