Public Services at risk of severe funding shortfalls

A recent finding from the New Economics Foundation(NEF) says public services could be exposed to severe funding shortfalls by 2023-24.  They say this could damage the ability of government to provide decent public services.

The NEF said several government departments without any explicit spending protections from ministers, such as prisons, public health and housing, would be exposed.

The NEF is a British think-tank that aims to help build a “new economy where people are really in control.” They say:

“Together we can change the rules to make the economy work for everyone. There has never been a greater need for a new economy. The New Economics Foundation exists to make it happen. We work with people igniting change from below and we combine this with rigorous research to fight for change at the top.”

Public Services worst affected.

Britain’s prisons would face a budget black hole worth £70m per year by the middle of the next decade.

Funding for public health, which covers addiction services, would face cuts worth £80m by the middle of the next decade.  This is under the current departmental spending restrictions if left unchanged.

Housing and planning, including schemes to incentivise the building of new homes and homelessness prevention, –would risk cuts worth about £30m per year over the same time period.

The findings come ahead of the autumn budget.

This is when the chancellor also plans to unveil the total amount of money available for a comprehensive spending review covering Whitehall departments next year.

The government has pledged to protect spending on areas such as the NHS, schools, defence and overseas aid. But some departments face tighter constraints on spending that can result in cuts over time.

Basis of NEF’s analysis.

NEF’s analysis is based on rolling forward the current spending restrictions imposed by the government until 2023-24. Which would be the likely final year of a four-year spending review.

It suggests the Chancellor, Philip Hammond, could meet his current deficit targets even if the government borrows a further £24.1bn per year by 2023-24.

The Chancellor has previously argued there was “light at the end of the tunnel” for the public finances. Raising the prospect of greater spending on public services at the autumn budget to bring austerity to an end.

While allocating funds at the budget, the government would conduct the spending review next year after Brexit.

The head of economics at the NEF, Alfie Stirling, said:

“The decade of austerity so far has arguably been the worst policy error in a generation.”

“If the chancellor fails to take the opportunity to learn from the lessons of the past by taking action at the spending review, we could be living with the consequences of deteriorating service quality and lost living standards for years if not decades to come.”

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