IFS warns Hunt’s ‘tax cuts’ will be ‘paid for by planned real cuts in public service spending’

The Institute for Fiscal Studies (IFS) said that the Chancellors “substantial tax cuts” for workers and SMEs are to be “paid for by planned real cuts in public service spending.”

The IFS said that the future spending plans by Jeremy Hunt means that £20 billion will have to be found in 2028/2029 to prevent cuts on local government departments and the justice system.

On Thursday Institute director Paul Johnson said at briefing that Hunt had “pencilled in numbers that suggest he wants to try to wrestle the size of the state back down towards where it was in 2019.”

The IFS Institute director said, “Given the demands of servicing our debt, and presumably paying for more healthcare and pensions, achieving that will require some sharp cuts in many areas of public spending.”

research economist Bee Boileau, said: “The tight spending settlement set out after 2025 means really significant cuts for unprotected departments.”

Ben Zaranko, a senior research economist at the IFS, said councils, courts and prison services, which are still working through a post-pandemic backlog, along with the Department for Work and Pensions “might be squeezed” after the Chancellor’s proposals.

Zaranko told the briefing, “It seems inconceivable that you could make cuts of 2% or 3% per year to those services and not have some impact on quality.

“We’ve seen councils in financial difficulty, maybe we will see more of that. We’ve seen the quality of service in prisons and the court system deteriorate maybe there will be more of that.

“But unless you can find some magnificent, heroic productivity improvements in those areas, I think it seems likely that the range and quality of public services would have to suffer at some point.”

Johnson said the “challenge of sticking” to the government’s spending plans “will be really very serious.”

He added, “I think the chances that we will actually get public spending service cut in the way that you’ve seen in the figures that have been presented are pretty small.”

The IFS Institute director said that the autumn statement has left “a lot of questions unanswered.”