Ministers warned: Hike taxes or public services will get worse

Posted On: 
11th October 2018

Ministers will be forced to impose big tax hikes on the public or face deteriorating public services, experts warned today in a damning report on government spending.

Theresa May and Philip Hammond have been given food for thought ahead of the Budget
Credit: 
PA Images

Key areas such as prisons and adult social care are already struggling under current spending levels after almost a decade of austerity, and conditions will only get worse if they face further cuts, the Institute for Government said in a new report.

And in a thinly-veiled swipe at the current regime, the thinktank warned that the Government will be unable to continue “muddling through, with dollops of emergency cash”.

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The report comes just a week after Theresa May declared the age of austerity was "over" in her Conservative party conference speech.

The Prime Minister said: “A decade after the financial crash, people need to know that the austerity it led to is over and that their hard work has paid off.”

Since 2010 the Government has cut local authority budgets by around a half, while spending on schools and the health service has failed to keep up with demand and public sector workers have suffered tough pay freezes or below-inflation hikes.

In its 2018 Performance Tracker report, the IfG, working with the Chartered Institute of Public Finance and Accountancy, said no government could “maintain public services of the current scope and nature without a large rise in tax”.

“It is clear that demographic pressures and other trends… will prove unsustainable without a significant change in the scope or nature of public services, a change in the degree to which people pay directly for those services, or a much higher level of taxation,” it said.

It added: “There are clear signs that neither prisons nor adult social care can continue to operate at their current level of efficiency.

“Any attempt to try to maintain or increase the level of output without increasing spending is likely to lead to a further deterioration in service quality.”

The report noted that ministers had been “quietly” shifting public costs onto individuals - with councils introducing new charges for garden waste or taking on volunteers to run libraries.

Gemma Tetlow, chief economist at the Institute for Government, said: “The Prime Minister and Chancellor must start making explicit the realities facing the country about what public services cost and how that money can be raised.

“They need to begin telling people clearly that they face a national choice.”