Theresa May warned she will need £20bn to deliver Conservative conference promise to 'end austerity'

The prime minister declared austerity was 'over' in keynote speech to Tory conference

Theresa May has been warned she would need an extra £20bn to deliver her conference pledge to end a decade of austerity.

Paul Johnson, director of the respected Institute for Fiscal Studies, delivered a blunt assessment of the prime minister’s plans, saying she would need to find tens of billions of pounds over the next five years to ease cuts and fund public sector pay rises.

Ms May sought to strike an upbeat tone in her address to the Tory faithful, where she declared austerity was “over” and told the public “their hard work has paid off”.

But Mr Johnson told BBC Radio 4’s Today programme: “I don’t know what she means by the end of austerity, but it won’t look like it, of course, if she doesn’t find money for significant pay rises across the public sector.”

“But if you look at the plans the government has got, it is increasing spending a lot on the health service and it has got plans to increase spending on defence.

“If the rest of the public sector is to avoid austerity, so at the very minimum if cuts stop from now on, that is going to require the government to find at least an extra £20bn or so by the end of this parliament.

“And, even that won’t feel particularly generous, but it will mean, of course, £20bn more on the deficit compared with what’s being currently planned.”

The leading economist said the levels of public sector debt is a concern for Philip Hammond, adding: “After eight years of growth the debt, the outstanding level of debt that the public sector has, is still at a very high level and isn’t coming down at the moment.”

He also warned that if Brexit resulted in a recession, a fresh period of austerity would follow.

Mr Johnson said: “At least in the short run the chancellor may decide that he needs to spend more in order to support the economy. And, of course, that would mean another period of austerity later on to drive the deficit down further.

“But if – if – we have a recession following Brexit, for example, then that won’t, in my view, result in immediately additional cutbacks. It will almost certainly result in more spending to support the economy.

“And then another long slog to get that deficit down again.”

Torsten Bell, director of the Resolution Foundation think tank, also questioned the promise, saying deficit reduction efforts were “far from over”.

He said: “The Treasury is formally committed to the long-held ambition to balance the budget – but achieving that is still a very long way off.

“At the Spring Statement last March the government wasn’t on track to reach that goal until 2027-28, with further tax rises and spending cuts required to get us there.

“That’s less ending austerity and more a decade of it to go.”

Labour dismissed the austerity pledge as a “con” and called for an end to all cuts planned over the rest of this parliament.

“If the prime minister wants to back up her words with action, Philip Hammond should announce immediately that the cuts scheduled for the next four years will be cancelled,” said shadow chancellor John McDonnell.

“If he cannot, or will not, then Theresa May’s announcement today was not just empty – it was clearly a deceitful attempt to trick the public.”

Ms May began her speech to Tory activists by dancing onto the stage, before setting out a hopeful message that Britain’s “best days are yet to come”.

As well as the austerity pledge, she announced a fuel duty freeze expected to cost some £800m and a cancer strategy to improve early diagnosis.

Her focus on domestic policy was clearly a move to drag her party away from divisive Brexit rows, which had dominated the conference in Birmingham.