The UK could be facing 'Austerity Season 2': What does that mean for you?

Labour has accused the government of ushering in "Austerity Season Two" after new chancellor Jeremy Hunt warned spending cuts are on the way.

Hunt, who served as a cabinet minister during the austerity years of David Cameron and Theresa May, warned of decisions of "eye-watering difficulty" both on taxation and spending – but insisted the most vulnerable would be protected.

It comes in the aftermath of Liz Truss's and Kwasi Kwarteng's disastrous mini-budget, which blew a hole in the UK's finances and has since been all but scrapped by Hunt.

Read more: What is the pension triple lock and could it be scrapped?

Labour has criticised the plans for spending cuts, with shadow chancellor Rachel Reeves claiming: "He was a big part of Austerity Season One, and now he says the cure is Austerity Season Two."

How big are government cuts going to be?

The government has a vast funding hole to fill on 31 October when it announces its fiscal plan in the aftermath of the economic chaos caused by the government's mini-budget in September.

The plans, which included a spree of unfunded tax cuts, triggered panic in the global markets sending the cost of UK borrowing soaring and forcing the Bank of England to buy tens of billions of UK government debt to prevent pension funds collapsing.

Truss sacked chancellor Kwarteng before hiring Hunt, who has since confirmed U-turns on almost all the measures.

Despite ditching Truss's approach, the Resolution Foundation think-tank warns there is still around a £40bn funding black hole.

The think-tank has warned the cuts could be similar to those under the 2010 Conservative-Liberal Democrat coalition.

“These are big [spending deficit] numbers," Resolution Foundation chief executive Torsten Bell told BBC Radio 4’s Today programme.

"If we are talking of spending cuts between £30-40bn then they’re not that far off the scale of the cuts announced by George Osborne back in 2010."

Which areas could be cut?

The government has already chopped back its flagship energy price guarantee, which caps energy prices so that the average annual bill will be £2,500.

Hunt has said that the scheme will now run until April before being reviewed to see how it can be best targeted to help those struggling the most.

Read more: Top Liz Truss aide suspended as No 10 condemns ‘unacceptable briefings’

On this scaling down of energy support, Bell said: “It’s a big deal, if he [chancellor] did scrap all of that he’s saving up to £40 billion, but it’s a big deal for households too because our bills are due to hit £4,000 in April.

“I think really £4,000 is so large that even middle-income households won’t be able to afford those bills next year.

“So he’s done the easy bit, scrapping the existing scheme, what he’s got to do is some hard work about how he intends to provide support for lower and middle-income households next year.”

The government has resisted revealing details of other cuts, with Hunt has said every department will be expected to make "efficiency savings".

However, succumbing to political pressure from her own ministers and MPs, Truss has agreed to stand by her pledge to increase defence spending to 3% of GDP by 2030 and protect the pensions triple lock.

The government has refused to rule out cancelling the proposed inflationary uplift to benefits in April next year which was promised by former chancellor Rishi Sunak in May.

There are also reports the government is considering postponing changes to adult social care which would have placed a cap on costs.

Can public services cope?

In its analysis of the performance of public services, the Institute for Government (IfG) has said there's no "meaningful fat to cut".

Days before, Treasury minister Simon Clarke claimed there was "always something you can do to trim the fat" on public spending.

"By 2025, public services won’t have returned to pre-pandemic performance, which in most cases was already worse than in 2010 when the Conservatives came to power," Nick Davies, programme director at the IFG, said.

Read more: Tory MP reveals he has submitted no confidence letter in Truss

"It's been a lost decade for public services There's no meaningful fat to cut."

It comes after a study led by the Glasgow Centre for Population Health (GCPH) and the University of Glasgow said an additional 335,000 excess deaths were observed across Scotland, England and Wales between 2012 and 2019.

Co-author of the report, Professor of Wellbeing Economy Gerry McCartney, said: “As the UK government debates current and future economic direction, it needs to understand, and learn from, the devastating effects that cuts to social security and vital services have had on the health of the population across the whole of the UK."

Watch: Chancellor faces finding £60bn of spending cuts to fund mini-budget, IFS warns