The government signals light at the end of the tunnel but the system is already loaded with further cutbacksby Carys Roberts and Mary Reader / August 30, 2018 / Leave a comment
There has been a lot of hot air about the “end of austerity” since the Conservatives’ unexpectedly poor general election result. Chancellor Phillip Hammond has reassured us that “there is light at the end of the tunnel.”
But there is a crucial point here that is underappreciated. Even if no new cuts are made, many future cuts planned by George Osborne have been pre-programmed into the system. Even if the government does nothing, these pre-loaded cutbacks will roll onwards, and their effects will intensify as demand for public services grows over time. Spending per person is forecast to be 3.9 per cent lower in real terms by 2021-22 than in 2010-11.
What are these pre-programmed cuts, when are they coming and who will they impact the most?
Many of the cuts yet to come fall on the welfare budget, which makes up around a third of government spending. Nearly £13bn worth of cuts to social security for working-age families was announced in the 2015 summer budget and subsequent statements. But most of the impact is yet to be felt. This is because the biggest social security cuts are in the form of freezes on in-work benefits and child benefits. As living costs rise with inflation, the impact of a benefit freeze is felt more deeply over time.
These changes are set to affect upwards of 11m families, and will be more regressive than cuts to welfare made by the Coalition government, with the poorest households set to lose 10 per cent of their income. Parents, and particularly single parents, will lose the greatest sums. Universal credit originally promised to lift 350,000 children and 600,000 adults out of poverty, but cuts leave the flagship welfare policy a shadow of what was originally envisaged: the policy changes are likely to result in an additional million children in poverty by the end of the next decade compared to the original plan.