Housing Cuts Are “Austerity By Stealth” Says New Report
The government is accused of sustaining “austerity by stealth”, with housing and planning facing cuts of £30m per year by 2023/24.
Analysis from the New Economics Foundation (NEF) shows services with no current spending protections could see further real-terms cuts of 2.1% after 2020. This includes vital areas of service provision now facing a continuation of cuts over the five years from 2019/20 to 2023/24, says a report by 24Housing.
Housing and planning – including schemes to incentivise building new homes and homelessness prevention – are identified as at risk of cuts of £30m per year by 2023/24 However, the analysis shows that government could meaningfully end austerity when the total amount of money available for the 2019 Spending Review is announced at the Budget this autumn. NEF modelling shows that the Treasury has room to borrow more even within its own deficit targets – while there is also the potential to raise tax contributions from the most well-off.
Alfie Stirling, NEF head of economics, said: “The decade of austerity so far has arguably been the worst policy error in a generation (and) as a consequence, the economy has suffered substantially. If the chancellor fails to take the opportunity to learn from the lessons of the past by taking action at the Spending Review, we could be living with the consequences of deteriorating service quality and lost living standards for years, if not decades to come.”
The new research is the first in a series from NEF about the 2019 Spending Review and uses NEF’s new departmental spending model to project forward and simulate different government spending review settlements across three illustrative scenarios. Together, they show government has the space to either end austerity, or even go further and reverse some of the harm caused in recent years.
The three scenarios the report looks at are: a ‘core’ scenario, projecting forward the most likely government plans at this point in time; a ‘maintaining standards’ scenario, setting out new funding to prevent a further deterioration in services; and an ‘improving outcomes’ scenario, which provides additional resources to recover some of the ground lost since the onset of austerity in 2010.
The NEF maintains these illustrative scenarios as “entirely fundable” given the right political and policy will. Even within the government’s current deficit targets, the report sees scope to borrow a further £24.1bn per year by 2023/24. The analysis suggests by shifting the deficit target to focus on day-to-day spending only – similar to the early rules adopted by the coalition government – annual borrowing could rise by up to £31.2bn by 2023/24.
NEF researcher Sarah Arnold said the finding showed it was time to move on from the “failed experiment” of austerity and its decimation of public services.
“We have demonstrated that the government has headroom to invest in services and spending to improve outcomes and reverse some of the damage. To not use this space would be highly irresponsible and would condemn the UK to a further five years of decline,” she said.
