George Osborne: driving the country to further austerity. Photo: Getty
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Autumn Statement 2014 fallout: 60 per cent of cuts still to come

The main lesson to take from George Osborne's pre-budget announcements this week is that the worst of austerity is yet to come.

Following the Chancellor's Autumn Statement, which included some disappointing borrowing figures and confirmed that he had missed his deficit target, sees some worrying fallout today. Both worrying for the Conservatives politically and worrying for the future of the country's public services.

The Office of Budget Responsibility, in response to George Osborne's announcements, predicts that £14.5bn further cuts will need to be made to Whitehall departments by the end of the decade by the next government. The spending watchdog warns that 60 per cent of cuts are still to come in the next parliament, in spite of David Cameron's prediction that his government would have overseen 80 per cent of cuts by next year.

If the situation plays out as the OBR has warned, then our overall reductions could leave public spending at its lowest level since the 1930s, as a proportion of GDP. It also warns of a loss of 1m public sector jobs by 2020. 

Osborne is clearly rattled by this forecast. Being grilled on it on the BBC's Today programme this morning, he ended up snapping that he rejects the, "totally hyperbolic BBC coverage of spending reductions", comparing the broadcaster's coverage to its narrative in 2010 on spending cuts.

He admitted on the deficit: "I would loved to have gone further in this parliament, but we have been hit with all sorts of economic storms". He also acknowledged the tough cuts required in the future, saying, "I am the first to say there is more to do, we've got some difficult decisions to go on taking on public expenditure and the welfare bills."

Osborne said it was "nonsense" that he would be unable to achieve the further spending reductions. His fellow cabinet minister, the Lib Dem Business Secretary Vince Cable, disagrees. He dismissed his coalition partner's plan as, "simply not realisable".

With public services and local government squeezed to the point of suffering already, the OBR's warning could make the Tories a difficult sell to the electorate for a second time round. However, those who support the Conservatives believe that cuts to public spending rather than tax rises are the right direction, and may therefore respond favourably to Osborne's plea to allow him to "stay the course".

Anoosh Chakelian is deputy web editor at the New Statesman.

Photo: Getty
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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.