UK PUBLIC services will be slashed by up to £17 billion, the influential Institute for Fiscal Studies (IFS) has warned, as Tory chancellor Rishi Sunak sets out to achieve his goal of ‘balancing the books’ over government spending.
The IFS said the government was on track to spend between £14bn and £17bn less each year on a range of public services from April 2022, compared to what was planned before the Covid-19 pandemic hit an already collapsing UK economy last year.
Sunak’s savage cuts to public services will be officially revealed when Parliament resumes from summer recess in September.
As the IFS report makes clear, this will be a day of reckoning for the Tories as they grapple with an economy that is plunging into recession, despite all talk of an economic ‘bounce back’ following Johnson’s forced reopening at a time when the Covid pandemic is still tearing through the country.
In the background to this report, the IFS said that Sunak was set to receive a £30 billion windfall from the Office for Budget Responsibility (OBR) for public services this year.
Most of this predicted upturn in the government finances came from an increased number paying taxes as companies reopened, with savings made by ending furlough payments and cutting the £20 a week increase in Universal Credit payments.
This still left a massive gap of £203 billion between what the government gets in revenue and what it spends on services – the budget deficit.
In fact the IFS warns that even this small decrease in the budget deficit will not be sustained, with British capitalism ‘facing lasting damage’ from the pandemic and increasing interest repayment on its debts.
Isabel Stockton, research economist at IFS, said any higher spending to meet Covid demands and cost pressures, or to meet demands for pre-existing expenses such as social care, may require cuts in spending elsewhere, tax increases or higher levels of borrowing.
The IFS warnings follow on from a warning shot to Sunak issued by the OBR earlier this month, that he would have to spend an additional £10 billion a year for the next three years on public services to deal with the economic cost of the pandemic.
Overshadowing all this is the massive UK national debt which has been driven up to £2.2 trillion or 99.7% of Gross Domestic Product (GDP). 100% of GDP means Britain is officially bankrupt.
To date the Tories have been able to service the interest on this debt thanks to historically unprecedented near zero interest rates on debt repayment.
But with inflation dramatically increasing, government debt repayments are already shooting up with no end in sight.
The Tories spent a record £8.7 billion in interest payments on the UK’s debt last month, largely because half a trillion pounds worth of government debt was linked to global inflation rates.
Sunak faces a gargantuan job of fulfilling his pledge ‘to put the public finances on a sustainable path’.
It will not be achieved through a few cuts spread across public services but only by an all-out war to slash government spending to nothing. It means accelerating the privatisation of the NHS, cutting education and social care and every other public service.
At the same time, it means driving down the wages of public sector workers who have not been privatised out of existence, along with cuts to benefits and pensions for the elderly.
In short, it means an all-out class war to destroy all the gains and rights won by workers in 200 years of struggle.
The working class will not tolerate being driven back to the starvation conditions of Dickensian Britain to save a bankrupt capitalist system. The Tory onslaught will spark the socialist revolution in Britain.
The urgent issue today, is to build the revolutionary leadership prepared to mobilise the strength of the working class in a general strike to kick out the Tories and go forward to a workers government and socialism.
There has never been a better or more urgent time to build the WRP to provide the revolutionary leadership required to take the working class to power. Join today!