The Institute for Government said it would cost £25bn a year to keep public spending growing in line with GDP
in the coming years, the Government has been warned.were being squeezed by inflation, forcing Whitehall departments to make cuts if they do not get extra funding.appeared to give the Chancellor an £11bn boost because borrowing so far this year has been lower than expected.
Just to compensate departments for inflation would cost £11bn a year by 2029, according to the IfG – but that would still mean significant cuts to all services other than health, defence and foreign aid. Both the Conservatives and Labour have pledged to stick to the current spending framework and to cut taxes as soon as it is affordable to do so.
They said that the short-term improvement in the public finance, caused largely by inflation pushing up the value of tax receipts, would give Jeremy Hunt “looks on the surface to be a fiscal windfall”. But that does not take into effect the need to spend more on services in order to avoid real-terms cuts, the researchers warned.
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