The Chancellor’s plans for massive cuts in public spending will cause “major difficulties” in a range of public services and could hit the NHS, a North East peer has warned.
Businessman Lord Wrigglesworth, former Member of Parliament for Stockton South, said he believed voters had not yet grasped the scale of the cuts the Government was planning.
Despite being a Liberal Democrat peer he expressed concern about cuts implied by the last week’s Autumn Statement, which included plans to eliminate the Budget deficit by 2018-19 and was signed off by both Coalition parties.
And Lord Wrigglesworth warned that it may simply be impossible to reduce spending to this extent while still ring-fencing the NHS.
So far, the Government has avoided cutting funding for the NHS and kept funding for schools roughly steady, but this has meant that cuts have fallen even more heavily on other services such as policing or local councils.
Speaking in the House of Lords, the peer warned: “The forecast cuts in expenditure that have to come in the next Parliament are enormous, and I am not sure that people outside this House, or even in the House, have fully understood the scale of the proposed cuts, which we need to think about very hard.
“Under the proposals, the Foreign and Commonwealth Office will have had a 65% cut in spending. It is proposed that the Home Office should have a 46.5% cut in spending, and that the Department for Business, Innovation and Skills will have a cut of 30%.
“If those departments are going to face cuts on that scale, it will cause major difficulties for their own services and for the services they provide.
“Inevitably it raises a question about the ring-fencing of all departments, particularly the National Health Service, if the cuts are to be sustained.”
The Chancellor was betting on a the economy growing so that tax revenues would increase, reducing the need for cuts, Lord Wrigglesworth said.
But there was no guarantee growth would take off to that level, he said.
“The only hope, of course, is that growth really takes off not only in the economy generally but in the tax revenues that are coming in.
“That will enable future Chancellors not to have to make cuts on the scale that is being suggested.
“We need to be very cautious about whether we can sustain either ring-fencing or should make cuts on that scale.
“Anyone who thinks about this will see that they are probably impossible to achieve. That is why I described the Autumn Statement as a fingers-crossed one.”
Analysis by official spending watchdog the Office of Budget Responsibility (OBR), published alongside the Autumn Statement, warned that the cuts required for Chancellor George Osborne to meet his targets would be higher than the cuts already introduced.
It said: “The figures imply that roughly 40 per cent of the total implied cut in day-to-day public services spending between 2009-10 and 2019-20 will have taken place over this Parliament, with roughly 60 per cent to come in the next.”
The OBR report states that the Government spent £5,640 on services per person in in 2009-10. Today, that figure is down to £4,910. And by 2019-20, it will be down to £3,880.
All the figures have been adjusted for inflation and are based on today’s prices.
But if the Chancellor continues to protect the NHS, schools and overseas aid, spending on everything else will fall from £3,020 per person in 2009-10 to £2,280 today and £1,290 in 2019-20, much less than half the2009-10 figure.
The Office for Budget Responsibility says these cuts “would pose a significant challenge”.
- Lord Wrigglesworth is a former chairman of Port of Tyne and was Chairman of the NewcastleGateshead Initiative.