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Austerity 2.0 Snuck into Chancellor Jeremy Hunt’s Autumn Statement as NHS and Services Face Huge Cuts

Unprotected departments face 14% cuts to fuel the Conservatives’ pre-election tax rebate

Jeremy Hunt MP, Chancellor of the Exchequer departs Downing Street to deliver his Autumn Statement this week. Photo: Imageplotter/Alamy Live News

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A new round of austerity is on its way if the next Government sticks to plans snuck out in the Autumn Statement – with Chancellor Jeremy Hunt pushing huge cuts to departments onto the next Government to balance his budget. 

The NHS alone faces cuts of £5bn in real-terms, according to Lib Dem analysis of Wednesday’s major fiscal event. 

Jeremy Hunt has cut day-to-day spending in cash terms for NHS England in 2024-25 from £165.9bn in his March Budget to £162.5bn in the Autumn Statement, a cut of £3.4 billion.

Taking inflation into account, that will leave the NHS budget £4.7 billion (2.9%) lower compared to 2022-23. It comes despite the Conservative Government handing £3.8bn a year of tax cuts to the banks. 

Jeremy Hunt cut the Bank Surcharge from 8% to 3% in April this year, even as he increased taxes on millions of families by extending the freeze in income tax thresholds. 

It follows Conservative cuts to the Bank Levy every year from 2016 to 2021. The two bank taxes are forecast to raise a combined £2.4 billion next year, down from £4.7 billion in 2016-17 – a 60% real-terms cut. 

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Analysis by the Liberal Democrats shows that banks will pay £22 billion less over the next five years than if revenues from the Surcharge and Levy had been maintained at 2016-17 levels in real-terms.

Jeremy Hunt failed to mention the crisis in the NHS in his Autumn Statement, instead kicking cuts to health budgets down the road. 

The Trades Union Congress (TUC) has been vocal in its criticism of the Chancellor’s latest round of austerity measures. The trade union body said the Chancellor has confirmed “another round of punishing spending cuts to public services and investment”.

Cutting National Insurance won’t make up for “13 continued “years of economic failure on living standards and growth” the organisation said in a statement. 

Growth forecasts have been revised down and real wages are set to remain below 2008 level until 2028. 

TUC General Secretary Paul Nowak said: “At a time when our schools and hospitals are crumbling – the Chancellor has confirmed another round of punishing and undeliverable spending cuts to public services and investment. Be in no doubt – if the Tories win the next election, even more austerity is on the way.”

All the Bad News Jeremy Hunt Buried in His Autumn Statement

Details buried in the Chancellor’s statement show we are heading for years more of tax rises, low growth and public sector cuts thanks to his Government, reports Adam Bienkov

Dr. John Puntis, Co-Chair of Keep Our NHS Public, expressed grave concerns about the state of the NHS, pointing out the £1.5 billion gap in current Integrated Care Systems budgets alongside record waiting lists. He criticised the Chancellor for ignoring the healthcare crisis and for policies that he views as punishing sick and disabled people.

Instead of investing in the NHS, Dr Puntis said: “[The Conservatives] have a Victorian workhouse mentality that seeks to further demonise and impoverish sick and disabled people by withdrawing benefits unless they get into work. 

“Extra and more timely medical appointments are promised to people as a solution to support this, yet without announcing any additional NHS funding or capacity to enable it…We desperately need a Government that will seek to improve all our lives and not further degrade them by choosing a second phase of austerity.”

Under the Government’s spending plans, real-term cuts are coming to public investment from next year, signalling a “new round of austerity, which could hinder economic growth and prosperity,” a spokesperson for the progressive Institute for Public Policy Research think tank said. 

Carys Roberts, IPPR executive director, said: “The chancellor claimed to be making long-term decisions, but his actions prove otherwise. The UK sorely needs investment – in schools, homes, hospitals, and in net-zero industries of the future. But the chancellor announced real-terms cuts to public investment, which will hold back economic prosperity, and he chose to cut taxes which will suck money out of public services. 

“This is despite the public favouring higher rather than lower taxes and spending. Many of his most consequential plans are put off to the next parliament, when we could have a different chancellor altogether.”

Real-terms capital spending – investment in infrastructure – is projected to fall by £20 billion in real terms (or a reduction of a third) in a few years, according to the Resolution Foundation. The economy is in the weakest state in the run up to an election in three decades, the Resolution Foundation said in a post-statement briefing. 

RDEL = Real Terms (Inflation Adjusted) Departmental Expenditure. Unprotected departments (green line) see major cuts in the coming years. Picture: Resolution Foundation briefing

Unprotected Government departments will see their real budgets fall by 14% under Chancellor Hunt’s plans, delayed until the next Government is in. An election is expected around May or Autumn next year. 

“2010 levels of austerity are coming” Smith added, something that is “absolutely undeliverable given public services pressures”. Almost all the handouts in National Insurance tax cuts come from reducing departmental spending in the future, several other analysts have noted. 

Real household disposable income has also collapsed under Johnson/Truss/Sunak compared to previous Prime Ministers, with high inflation following the pandemic having a major impact on family finances.

The independent Office for Budget Responsibility says that if fuel duty rates are held at the current rate then more than 43 per cent of the supposed £13bn spending headroom for Government in 2028-29 would be removed. The Government has repeatedly frozen fuel duty over the past decade following lobbying from motorists. 

Moreover, the financial damage from tax threshold freezing far outweighs the benefit to people from the National Insurance cuts by a factor of around four. Meanwhile, tax as a percentage of GDP is continuing to grow past its highest levels ever, even with the NI reduction, James Smith, Research Director at the Resolution Foundation said.

In a Progressive Britain event on Wednesday night, Shadow Environment Secretary Steve Reed indicated Labour’s intention to diverge from the Conservative spending cuts, saying: “The party isn’t going to walk into an open trap,” according to Politico. 

he Government could raise £7.5 billion a year for vital public services by closing unfair tax loopholes, according to new research by tax campaigners shared by Byline Times this week.

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Josiah Mortimer also writes the On the Ground column, exclusive to the print edition of Byline Times.

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