Is austerity in the UK really over after 2018's budget?

Philip Hammond knew what he had to do. With Theresa May sitting behind him, the chancellor’s job was to put flesh on the bones of the prime minister’s promise to the British public that the age of austerity was coming to an end.

He made all the right noises. There was extra money to smooth the introduction of universal credit, now more generous than the benefits it is replacing. There was the carrot dangled in front of cabinet colleagues that they would have more money to divide up in next year’s spending round. There were dollops of extra cash for schools, anti-terrorism policing, repairing potholes, and anti-submarine surveillance.

What there wasn’t was an actual end to austerity – at least, as most of the experts in the field would define it. The Institute for Fiscal Studies says that, at a bare minimum, ending austerity involves calling a halt to the next tranche of spending cuts for Whitehall departments. The Resolution Foundation thinktank has a slightly tougher approach. It says a real end to austerity would mean scrapping the cuts in working-age benefits due to come into force next year.

Hammond did neither, despite announcing what the Office for Budget Responsibility described as the biggest easing of fiscal policy since it was created by George Osborne eight years ago. Most of the chancellor’s generosity was reserved for the NHS, which accounts for 90% of the extra government spending in the years ahead, with the promise of a more generous spending settlement for other departments in the event that the Brexit talks bear fruit.

The Resolution Foundation summed up the thrust of the budget when it said Hammond had eased, but not ended, austerity. It estimated that those departments not protected by the Treasury’s ringfence – just about all of them, apart from health and international development – would see their per capita budgets cut between 2019 and 2023.


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