CHANCELLOR Kwasi Kwarteng has confirmed that public services face further cuts of up to £18 billion per year.
This comes following his dramatic U-turn on the 45p tax rate.
Budgets will not be topped up in order to take account of soaring inflation, the Chancellor said.
The move has been described by economic experts as one which is likely to have an “extraordinary” impact on the NHS and schools.
Kwarteng argued that it was right to stick within spending allocations made in 2021 despite inflation now being more than twice the forecast peak of 4% made then.
He told BBC Radio 4: “I think it’s a matter of good practice and really important that we stick within the envelope of the CSR [the Comprehensive Spending Review]."
The Institute for Fiscal Studies (IFS) has warned than an extra £18bn is needed in each of the next two years in order to restore “the real-terms generosity intended”, because inflation is sitting at around 10%.
Kwarteng also refused to apologise directly to the nation and to Conservative MPs who had been warned over a possible rebellion on tax plans.
He told the BBC’s Today programme: “There’s humiliation and contrition and I’m happy to own it.”
The confirmation of the cuts comes as the Treasury also plans real-terms cuts to benefits.
Speaking to LBC Radio, the Chancellor refused to say whether benefits would be uprated in line with inflation amid the cost-of-living crisis.
He said: “I’m not committed to any spending.”
Pressed on the issue of benefits, he added: “I’m not going to comment on spending today.
“What we are focused on is the growth plan, we have got a medium-term plan which will set out more spending policies in the near future.”
Inflation is now at 9.9% and is expected to rise to 11% in autumn, remaining at a similar level for much of next year.
Last week, head of the IFS Paul Johnson said: “It is pretty extraordinary. There’s a real problem for schools and hospitals. It’s going to be a real squeeze.”
