Tax hikes may be in the pipeline in Autumn Budget 2018 following the prime minister’s pledge to significantly increase spending on the NHS, according to the UK’s fiscal watchdog.
The Office for Budget Responsibility (OBR) said the long-term outlook for the UK’s public finances looks “less favourable ” after Theresa May’s promised NHS England an extra £20.5 billion by 2023/24.
It warned that to avoid government borrowing soaring to pay for the health pledge in the next decade, there will need to be tax increases and more cuts to public spending.
The third part of the health equation is expected to arrive in the form of a Brexit dividend, worth an estimated £5.8 billion.
In principle, this could cover slightly less than 30% of the cost of health package in that year.
The report says:
“Increasing health spending in the medium term, to address some of the immediate apparent pressures on the NHS, leads to greater long-term fiscal pressures.
“In effect, the government has now chosen to accommodate most of the demographic and other cost pressures we assume over the next 5 years, having not previously planned to do so.”
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