Jeremy Hunt’s autumn statement is set to lead to further deterioration of public services, even those receiving extra funding, such as schools and the NHS, are unlikely to catch up with the damage caused by Covid, a think tank has said leading.
The Institute for Government (IfG) said the statement, made last week, and presented by the Chancellor as generous under the circumstances, was deliberately anticipated, leaving any government after 2024 with extremely difficult spending decisions.
Its report also says less protected services, notably the criminal justice system, are likely to face effective cuts, with the sector unlikely to see a reduction in court backlogs or prison overcrowding.
Hunt’s decision to postpone most spending restrictions for two years from now “leaves very difficult spending decisions for the next government, whoever it is,” the report said.
Nick Davies, IfG program director and one of the report’s authors, said: “Most services will perform worse in 2025 than they did 15 years ago, with devastating consequences for people who depend on it. It is a poisoned legacy for whoever forms the next government.
It is unclear, say the report’s authors, whether it will be “politically viable for the next government to keep public spending in line with Hunt’s plans”. There will be issues caused by the £22billion in daily spending cuts planned for the 2025-26 and 2027-28 financial years, and other factors, according to the IfG.
One of the issues highlighted is the continued slow recovery of public services from the impact of the Covid-19 pandemic. Another is compensation, which accounts for more than half of public sector budgets. With significant pressure for higher wages and the likelihood of strikes if that doesn’t happen, the big numbers showing seemingly generous spending settlements could mean little real improvement.
Areas receiving extra money, such as the NHS, schools and local government, should be able to meet demands caused by changing demographics and inflationary pressures, the report says. “But they will struggle to do much more than that. In all of them, performance is currently well below pre-pandemic levels and the money provided is unlikely to be enough to bring it back to those levels.
With criminal justice, in particular, a small increase in funding in real terms already projected over the next two years will mean that demand is “likely to exceed spending by a significant margin”.
The authors say: “Prisons and courts are in a particularly dire state, with the problems felt before the pandemic severely exacerbated by it, and the spending decisions announced in the fall statement mean there is little likely to significantly reduce the backlog of Crown Courts or to safely accommodate the expected increase in the number of prisoners.
By contrast, according to the report, the extra £3.3billion pledged for the NHS, aimed at reducing waiting times for ambulances and A&Es, and improving access to GPs, is expected to meet growing demand – although it seems highly unlikely that this will be enough to tackle backlogs or solve longer-term staff recruitment and retention issues.
Similarly, an increase in school budget funding will restore base funding per pupil to actual 2010 levels by 2023-24, according to the IfG. However, this is unlikely to cover expected salary rewards and “is also unlikely to make up for learning lost during the pandemic – the equivalent for schools of the ‘backlog’ felt in other services”.