By Hannah Rodger
Westminster Correspondent
FINANCE experts have warned that the Chancellor’s Budget spending spree promises are “nowhere near as generous” as they appear.
The Institute for Fiscal Studies (IFS) said that Rishi Sunak’s commitment to splash the cash on Wednesday is not as it seems, when EU funding and previously agreed spending is taken into account.
The financial watchdogs warned that there would be “little left” for departments which had not already had funding increases decided before the budget.
Paul Johnson, director of the IFS gave a post-budget briefing yesterday, where he said: “The current spending plans are nothing like as generous as they appear.
“Average annual increases of 2.8% sound substantial; take account of the need to replace EU funding and factor in planned increases for health, schools, defence and overseas aid and there is relatively little here for other departments.
“If this spending envelope is stuck to, there are plenty of public services which will not be enjoying much in the way of spending increases over the next few years.”
Along with pessimism about Sunak’s pledges, Johnson added that tax increases could be on the cards in future as the Chancellor’s plans look “suspiciously front-loaded.”
He explained: “Spending increases pencilled in for the next two years are much bigger than what follows. This could suggest top ups in later budgets and hence a need for more tax or more borrowing.”
On the economic forecasts, he said: “Projected growth rates averaging barely over 1.5% a year for the next five years are feeble, frankly.
“And they are indicative of an economy that is not in a robust position to deal with shocks like the coronavirus.”
Mr Johnson branded the Budget an “odd affair”.
He said it was “really two budgets rolled into one”, adding: “There was the normal Budget setting out medium term tax and spending plans.
“And then there was the emergency Budget aimed at dealing with immediate potential consequences of the coronavirus.
“The latter made the former a rather odd affair.”
Another of the watchdog’s conclusions is that by 2025, spending per person for most public services will be “well below” what it was in 2010, when David Cameron took office and former a coalition government with the Liberal Democrats and at a similar level to what it was during austerity times.
Their conclusion states: “Outside of health, spending per person will still be 14% lower, and around 19% lower once you account for the spending that is simply replacing EU funding.
Ben Zaranko, research economist at the IFS said: “Taking the Government figures at face value, day-to-day spending on public services is set to increase now and be almost 10% higher by 2025 than it was in 2010. If we put that into per-person terms, to account for the growth of the population, it is set to be almost exactly the same in 2024/25 as it was in 2009/10, so we will be back where we were before the era of austerity.
“If we strip out health, real terms spending will be 7% lower in 2025 than it was 15 years previously.”
Meanwhile Labour’s shadow chancellor John McDonnell said the budget did not go far enough to help those in poverty or who are vulnerable, criticising the lack of investment for social care.
Speaking yesterday in the House of Commons, McDonnell said it was”unclear what additional support is being provided” and added: “The majority of people who do receive social care are older, disabled or vulnerable people. We have an £8 billion funding gap in social care budgets, as the result of ten years of austerity. Providers and local authorities are already stretched to near breaking point. We need to know how much additional support is being provided.”
Alison Thewliss, the SNP’s shadow chancellor, said it was a “disgrace” that the Scottish Government’s finance minster Kate Forbes had to carry out her budget “blindfolded” and added:”It is wholly unacceptable that Scottish local authorities, which had a legal deadline of yesterday to set their budgets and council tax, had to do so without knowing precisely how much they would have to spend.
“Now we find that Scotland’s budget next year will be lower in real terms than when the Tories first came to power.
“These proposals do nothing to redress the cumulative cuts or the short-changing of city and region deals.”
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