A senior Conservative minister has rejected suggestions that Chancellor Jeremy Hunt is planning to engage in a George Osborne-style austerity drive.
Mel Stride, the Work and Pensions Secretary, told ITV’s Good Morning Britain: “I really don’t see us going into any era of austerity.”
He was speaking after think tanks such as the Institute for Fiscal Studies (IFS) and the Resolution Foundation pointed out that the Chancellor had in effect found £20 billion for tax cuts in the autumn statement by choosing not to protect some departments against the growing costs of inflation.
IFS director Paul Johnson told a briefing on Thursday that the Chancellor had “pencilled in numbers that suggest” he intends to reduce the size of the state to where it was before the Covid pandemic, in a move that was likely to “require some sharp cuts in many areas of public spending”.
“George Osborne managed to get the size of the state back down after the financial crisis – that was painful,” Mr Johnson said.
“Doing it again will be more painful still.
“Mr Osborne made his cuts after a decade of big spending increases. Mr Hunt, or his successor, will have no such luxury.”
But Mr Stride said “I don’t think we’re heading into that at all”, when asked on LBC whether Britain was headed for “austerity mark two”.
Mr Osborne, chancellor during David Cameron’s premiership, cut public spending during the coalition government years, and after the Tories won a majority in 2015, as he looked to reduce the UK’s day-to-day spending budget deficit following the global financial crisis in 2008.
Theresa May, successor to Lord Cameron, who is now Foreign Secretary, announced an end to austerity policies in 2018.
Cabinet minister Mr Stride told GMB on Friday that tax breaks to businesses in this week’s fiscal event, along with future Civil Service productivity improvements, could help grow the economy and provide more money for public services.
He said: “We have to look at productivity. Public services aren’t all about just constantly spending ever more money. It is about the outputs.
“So John Glen (Cabinet Office minister), one of my very capable colleagues, and others across Government, are absolutely engaged in a mission to improve productivity across the public sector.
“I believe it is the case that if we were to increase productivity by 0.5% for example, there wouldn’t be any further pressure on increases in taxes.
“So I think there is a huge amount we can do through productivity and investing in the long-term to get that growth going.”
