Hammond £5bn short of 'austerity is ending' target, says thinktank

Prime Minister Theresa May vows to take the UK out of the EU on time

Prime Minister Theresa May vows to take the UK out of the EU on time

The Institute for Fiscal Studies told the chancellor that funds pledged in last year's budget to boost NHS spending, defence and global aid failed to safeguard local councils and some of the worst-hit government departments from further shortfalls.

Departments excluding health, defence and aid face more cuts under the government's spending plans, on top of the £40 billion they have endured already, the public finance think tank said.

The Chancellor needs to find another £5bn a year if he wants to fund the Government's promise to "end austerity", analysts at the Institute for Fiscal Studies will warn today.

"The provisional totals set out in the Autumn Budget imply that day-to-day public service spending will increase by 6.1% (£18.2 billion) between 2018-19 and 2023-24", the IFS report said.

"This would outstrip population growth, putting per capita spending on an upward trend".

Zaranko said the next round of cuts would be at a much slower pace than seen over the last decade "but would by no means represent an "end to austerity" ".

"But this would not be enough to meet the cost of the Government's existing spending commitments on the NHS, defence and overseas aid while avoiding cuts elsewhere".

Although previous spending reviews have covered a number of years, the IFS report said that Mr Hammond may choose to set out plans only for 2020-21 because of the economic uncertainty due to Brexit. To do so he would have to raise taxes, cut other spending or borrow more. Any boost to spending would be temporary, and further austerity would eventually be required.

"Unless Philip Hammond, at the very least, finds another £5bn at the Spring Statement, departments will be planning for yet more cuts next year".

"The government has already committed to increase day-to-day NHS spending by £20 billion over the next five years. 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".

Brexit uncertainty over the coming weeks is likely to make the situation worse, while the population continues to expand at around 1m people every four years, heaping further pressure on Hammond to find extra funds to meet his promise of ending the austerity programme which began nearly a decade ago.