'Austerity is over': spending on public services to rise, says May
May cautioned there would be 'no return to the uncontrolled borrowing of the past'
Funding for public services will rise in next year’s Spending Review, the prime minister has said, declaring that the era austerity was coming to an end.
At the Conservative conference in Birmingham, Theresa May said her party would set out its plans to boost spending once it has finished negotiating an agreement to leave the EU.
“When we’ve secured a good Brexit deal for Britain, at the Spending Review next year we will set out our approach for the future,” she said. “Debt as a share of the economy will continue to go down, support for public services will go up.”
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Chancellor Philip Hammond announced the 2019 Spending Review at the Budget last November. He will set out the overall direction of public spending in this autumn’s finance statement, with a review to distribute the funds to departments to follow next year.
After a decade of austerity that has seen public sector pay restraint and real terms funding cuts for many public services, May said that national debt is beginning to fall and “people need to know that their hard work has paid off”.
“Sound finances are essential, but they are not the limit of our ambition,” she added.
However, she also warned that there would be “no return to the uncontrolled borrowing of the past, no undoing all the progress of the last eight years, no taking Britain back to square one”.
May’s speech was light on detail as to what her proposed spending increase might look like. “The question is, what does the end of austerity mean?” said Emily Andrews, who leads the Institute for Government’s Performance Tracker, which assesses the performance of government..
If the increase doesn't match rising demand for services such as social care, and these services are asked to make further efficiencies in real terms, "we’re likely to see the pressure points we’re already picking up on worsen,” Andrews said.
Pressure on some public services has been growing since before the 2015 spending review, which has led to cash injections “when a moment of political or operational crisis was reached”, she told CSW. “At that point, it can’t be used productively to solve the underlying problems that can make public services fundamentally cheaper.”
“It is an absolute necessity, if we’re not going to keep increasing spending in line with demand, to have a plan setting out how to run services differently in order to make them fundamentally cheaper to run,” she said. “I didn’t really hear any of that at the conference.”
She also cautioned that there would be “clear trade-offs to be made” to balance additional spending on services, either in the form of restricting services or tax rises to pay for them.
Shadow chancellor John McDonnell meanwhile hit back at May, saying the pledge to end austerity was a “complete con”. “The government has already told us that spending for the next four years will be hit by many more vicious cuts. Nothing, sadly, has changed,” he said.
In her speech, May also rejected calls for a second referendum on Brexit and pledged to stick to her Chequers plan. "Leadership is doing what you believe to be right and having the courage and determination to see it through," she said.
May did not ruleout leaving the EU without a deal, despite acknowledging it would be a "bad outcome for the UK and the EU".
Echoing comments by Brexit secretary Dominic Raab earlier in the conference, she said: “It would be tough at first, but the resilience and ingenuity of the British people would see us through.”
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