Michael Burton 10 August 2022

Inflation set to wipe out 40% of public spending growth

Inflation set to wipe out 40% of public spending growth image
Image: pitchr/Shutterstock.com.

Higher inflation is set to wipe out 40% of the planned growth in public sector funding over the next three years leading to a £44bn shortfall, according to a study by the Institute for Fiscal Studies (IFS).

While original forecasts in last October’s Spending Review anticipated public sector inflation at 2.3% it has now risen to 3.7%. The average real terms growth rate in funding for the next three years has therefore dropped from the planned 3.3% to 1.9%.

The IFS estimates that funding growth for the Department of Health and Social Care will drop from the planned 4.3% to 2.9% and for the Department of Education from 2.2% to 0.7%.

To compensate the Treasury would need to find an extra £8bn this year and £18bn for each of the following two years, a total of £44bn.

Ben Zaranko, senior economist and author of the IFS study, said: ‘Sticking to existing spending limits in the face of higher costs would require departments to make efficiency savings; demanding further efficiency savings in order to fund tax cuts or cost of living support would pose acute challenges for public services.’

Cllr James Jamieson, Chairman of the Local Government Association, called for extra funding to meet the shortfall saying: ‘Only with adequate long term funding – to cover increased cost pressures and invest in local services - and the right powers, can councils deliver for our communities, tackle the climate emergency, and level up all parts of the country.’

SIGN UP
For your free daily news bulletin
Highways jobs

Family Support Worker

Durham County Council
Grade 6 - £27,269 - £30,060 (Pay award pending)
Do you have a real passion for helping families to make positive changes for themselves and their children? This might be the right role for you!   WH Durham
Recuriter: Durham County Council

Clerical Officer Receptionist

Durham County Council
Grade 3 £24,404 - £25,183 Pro Rata to hours worked Pay award pending
WHAT IS INVOLVED? We are looking to appoint a part time Clerical officer/Receptionist within Business Services to provide a professional, effective a Durham
Recuriter: Durham County Council

Administration Assistant

Durham County Council
£25,584 - £27,711 pro rata
Administration Assistant Grade 5    £25,584 - £27,711 pro rata Temporary – required from 1st October 2025 until 31 December 2025 37 hours per week, Te Consett
Recuriter: Durham County Council

Support Assistant

Durham County Council
£24,027 pro rata
Support Assistant Grade 1 £24,027 pro rata Temporary – required from 1st October 2025 until 31st October 2026 Part Time, 32.5 hours Mon - Fri 9am -4pm Consett
Recuriter: Durham County Council

Lecturer in Foundation Learning -Maths, English and Digital

Durham County Council
Grade 9 £34,314 - £37,938 pro rata for part-time term time working PAY AWARD PENDING
The DurhamLearn Foundation Learning programme area delivers Digital Skills, English and Maths Functional Skills.   An opportunity has arisen for a Lec Durham
Recuriter: Durham County Council
Linkedin Banner