26 September 2023

UNITED KINGDOM: No PS allowance for inflation — Hunt

Start the conversation

United Kingdom Chancellor of the Exchequer, Jeremy Hunt says Departmental budgets set in last year’s Spending Review will not be reduced.

However, in-house spending will have to be reined in as soaring inflation has eroded their value.

The Chancellor used his Autumn Statement to set out plans for £55 billion ($A97.7 billion) in new savings over the next five years, largely through tax increases and spending restraint, although the National Health Service and the Department for Education will receive financial boosts.

He said Ministers planned to grow public spending, but would do it more slowly than in the rest of the economy to deal with a significant downturn in the nation’s finances, exacerbated by former Chancellor, Kwasi Kwarteng’s disastrous Mini-Budget in September.

“For the remaining two years of the Spending Review, we’ll protect the increases in Departmental budgets we’ve already set out in cash terms,” Mr Hunt (pictured) said.

“Then grow resource spending at one per cent a year in real terms in the three years that follow,” he said.

“Although Departments will have to make efficiencies to deal with inflationary pressures in the next two years, this decision means overall spending on public services will continue to rise in real terms for the next five years.”

Chief Secretary to the Treasury, John Glen and Minister for the Cabinet Office, Jeremy Quin have been tasked with running a new review to drive the efficiencies.

Director of the Institute for Fiscal Studies, Paul Johnson said proposals to increase public spending by one per cent a year from 2025 onwards would still mean cuts for unprotected Departments.

He said freezing capital spending until 2025 was “of course a real terms cut” with inflation running at 11.1 per cent for the year to October.

General Secretary of FDA union representing senior Public Servants, Dave Penman said the Government could not disguise the reality of sticking to last year’s Spending Review settlements in the face of rocketing costs.

“The Chancellor has cut spending across all Government Departments in real terms until 2025,” Mr Penman said.

“This will only lead to one thing — further pressure on vital services that the public relies upon.”

London, 19 November 2022

Start the conversation

Be among the first to get all the Public Sector and Defence news and views that matter.

Subscribe now and receive the latest news, delivered free to your inbox.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.