Hospitals, town halls and Whitehall will have to make new ‘stealth cuts’ thanks to a multi-billion pound ‘back door’ spending raid announced by George Osborne.
The Chancellor announced technical changes to the way public sector pensions are valued, meaning the NHS, local councils and a range of government departments face contributing more to the overall cost from 2019.
The move – effectively saving the Treasury about £2 billion a year – will have a big impact on the NHS.
Dozens of hospital trusts are already facing huge deficits, raising the prospect of cuts to front-line services. Cash-strapped police forces and schools could also be affected.
Changes to public sector pensions mean the NHS, local councils and some government departments face contributing more to the overall cost from 2019, and schools (file photo) could also be affected.
The £2 billion raid is separate from the extra £3.5 billion of cuts Mr Osborne demanded of departments by 2020 – from which the NHS, schools, defence and international aid are protected.
A Treasury review will be held to decide where these cuts should fall. ‘We will not burden our children and grandchildren,’ Mr Osborne told MPs.
The reduction in the ‘discount rate’ – the theoretical return on investments – will hit all ‘unfunded’ schemes in the public sector, including those for the NHS, the Army, police, teachers and civil servants.
Liberal Democrat education spokesman John Pugh said the move was a ‘political con trick’.
‘By announcing a change to the discount rate on public sector pensions – without any consultation – they are effectively removing a further £2 billion from public services and transferring it to the Treasury to give the illusion of a surplus: a political con trick that can only further damage public services.
This Government have consistently failed to explain to taxpayers and public servants how the resources it allocates match the commitments it makes, despite the promise to do so.
Hospitals, town halls and Whitehall will have to make new ‘stealth cuts’ thanks to a multi-billion pound ‘back door’ spending raid announced by George Osborne (pictured leaving Downing Street)
‘Unfortunately for the Chancellor, his smoke and mirrors on the pension contributions can’t hide the fact that the cuts are significantly worse than his headline announcement.’
Jonathan Clifton, of the centre-left IPPR think tank, said: ‘The Chancellor has once again promised to protect the headline amount of funding that goes to schools and health – but he is loading more pressure on to these services via the back door.’
According to the Red Book, the discount rate is being reduced from 3 per cent above CPI inflation to 2.8 per cent from 2019.
The figure is reviewed every five years, and reflects the Government’s estimate for the rate of economic growth over the medium term. Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy, said: ‘Raising employer contributions for public sector pensions is a stealth cut – meaning money is diverted from services back to the Treasury.’
The Chancellor was accused of failing to provide answers on how shortfalls in the health and social care sectors will be met.
‘The elephant in the room during this Budget was the massive black hole in health and social care funding,’ said Janet Morrison, chief executive of older people’s charity Independent Age.
Dozens of hospital trusts (file photo) are already facing huge deficits, raising the prospect of cuts to front-line services
£1.2BILLION AXE TO BENEFITS FOR DISABLED
Charities have condemned plans to cut benefits for the disabled by £1.2billion.
The personal independence payment changes will affect 640,000 who need help dressing or using the bathroom, campaigners say.
Cuts will save the Treasury £590million next year and £1.2billion by 2020-21, representing 30 per cent of government savings that year.
Ministers say national spending on the disabled will still rise because of increasing numbers of people affected. The Government is expected to breach its own benefits cap for the rest of this Parliament after shelving cuts to tax credits.
But Labour said yesterday the new cuts were the biggest revenue raiser in the Budget.
Under the changes, some disabled people will receive a reduced rate of PIP – down from £82 a week to £55 – and others will not qualify at all.
Charities have condemned plans to cut benefits for the disabled (file photo) by £1.2billion
The move has provoked angry protests outside Westminster over the past week.
Research by the charity Scope has found disabled people spend an average of £550 a month on the extra costs of their condition and say PIP makes a vital contribution.
Shadow chancellor John McDonnell said the decision to cut PIP to lower the rate of capital gains tax was ‘morally reprehensible’.
The charity Sense, which supports people who are deaf and blind, said it was a ‘bleak day for disabled people’.
Mark Atkinson, of Scope, said the changes would ‘make many disabled people’s lives harder’.
‘The silence at the dispatch box on these issues was deafening.
‘While NHS trusts are £2.3 billion in deficit and there is a £4.3 billion black hole in social care budgets by 2020, Westminster has yet again failed to provide any answers on how these shortfalls will be met.’
Dr Mark Porter, chairman of council at the BMA, added: ‘It is disgraceful given the crisis facing the NHS that there was no promise of extra funding for a health service that is buckling under pressure from rising patient demand, falling resources and staff shortages.
‘Hospitals and GP practices around the country are at breaking point and need urgent, extra investment to maintain even basic care to their patients.’