Ending austerity 'will cost government £31 billion', according to think tank
26 Oct 2018
Ending austerity 'will cost the government £31 billion', independent think tank the Resolution Foundation has suggested.
In its pre-Budget analysis, the Resolution Foundation calculated the cost associated with ending austerity. It proposed an end to day-to-day departmental spending cuts; a cancellation of the so-called 'benefit freeze'; and a reversal of the cuts to work allowances.
The Resolution Foundation stated that Chancellor Philip Hammond is set to be given 'a big helping hand' from the Office for Budget Responsibility (OBR): lower-than-expected borrowing could provide Mr Hammond with a '£13 billion windfall'. If maintained in the future, this windfall would be enough to increase the Chancellor's headroom against the fiscal mandate to nearly £40 billion by 2022/23, the Foundation said.
However, it also said that this will not be enough to end austerity.
While tax rises may be 'difficult to implement', the Chancellor does 'have options', according to the think tank. It has suggested freezing the main income tax threshold once the Conservative Party's manifesto targets have been reached, and cancelling the planned corporation tax cut, currently set to take place in 2020.
Commenting on the analysis, Matt Whittaker, Deputy Director at the Resolution Foundation, said: 'The Chancellor has a seemingly impossible task in his Budget of ending austerity, reducing the national debt and keeping the public finances protected against any Brexit uncertainty.'