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PHILIP HAMMOND will have to spend billions of pounds more if he truly wants to end austerity, according to an economic think tank.
The Chancellor would have to find an extra £5 billion a year by 2023-24 just to maintain current per capita levels of day-to-day spending across Whitehall departments which do not have ring-fenced budgets, the Institute for Fiscal Studies (IFS) said yesterday.
In an analysis of the choices facing Mr Hammond in advance of his Spring Statement next month, the IFS said he would need to spend £11bn to avoid it falling as a share of national income.
The IFS said spending increases he has already promised would be swallowed up by commitments to fund the NHS, defence and international aid — potentially meaning cuts to other areas.
Ben Zaranko, an IFS research economist and an author of the report, said: “The government has already committed to increase day-to-day NHS spending by £20bn over the next five years.
“Even though the latest plans have overall day-to-day spending increasing over that time, these increases wouldn’t be enough even to cover the NHS commitment in full.
“This suggests yet more years of austerity for many public services — albeit at a much slower pace than the last nine years.
“And while an economically bad Brexit would likely mean lower spending in the longer term, if anything it might require additional spending over the next few years.”
Shadow chancellor John McDonnell said that the findings by IFS show that austerity “is not over” despite claims made by Theresa May.
At last year’s Tory conference, the Prime Minister said that eight years of austerity were “over” and that people’s “hard work has paid off.”
Mr McDonnell added: “Unless Philip Hammond, at the very least, finds another £5bn at the Spring Statement, departments will be planning for yet more cuts next year.
“Nine years of brutal Tory austerity have wounded our public services and the whole country which relies on them.
“The Chancellor has promised a ‘Brexit bonus’ and any failure to deliver it at the Spring Statement will be yet more evidence of the Tories’ failure to negotiate a Brexit deal that benefits jobs and the economy.”
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