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New Economics Foundation warns more Tory cuts are coming

PUBLIC services will be subject to another round of government spending cuts within two years, a left think tank has warned.

Areas that do not have spending protections are in line for real-terms cuts of 2.1 per cent after 2020, the New Economics Foundation (NEF) has predicted. Funding for schools and the NHS has been protected in recent spending rounds.

Annual cuts of £70 million for prisons, £80 million for public health and £30 million for housing could be imposed by 2024, it found.

The government could borrow a further £24.1 billion per year by 2023/24 to bolster overstretched services and still meet deficit reduction targets, the NEF also claimed.

Chancellor Philip Hammond has said he will carry out a full spending review next year.

NEF head of economics Alfie Stirling said: “The decade of austerity so far has arguably been the worst policy error in a generation.

“As a consequence, the economy has suffered substantially.

“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.”

Shadow chancellor John McDonnell called on Mr Hammond to change course and stop the cuts.

He said: “This report lays bare the fiction of any end to austerity under the Tories, with massive cuts to prisons and public health budgets a huge danger to our communities.

“The NEF also makes plain the options open to the Chancellor at the forthcoming Budget. He can still change tack, ending austerity and even repairing some of the damage he and George Osborne have already done to our economy.”

The NEF used its own economic modelling and looked at the likely spending in ring-fenced areas and the implications that could have on other budgets.

Its core assessment of the government’s most likely plans would mean an average real terms cut of 2.1 per cent in some areas during the first half of the 2020s.

The think tank’s report was funded by the TUC, but its research was conducted independently by NEF staff, who had editorial control.

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