RISHI SUNAK may be forced to enact yet another difficult financial move, with public services being challenged, a think tank has warned amid staggering tax rises.
Rishi Sunak, Chancellor of the Exchequer, has been tasked with Britain’s recovery from the 18-month crisis brought about by the COVID-19 pandemic. This has meant tough decisions on the public purse, many of which have brought about debate in recent weeks. However, Mr Sunak could be facing another hurdle, a think tank has said, as costs continue to rise in a number of areas.
The Institute for Fiscal Studies (IFS) has warned the rapidly increasing cost of healthcare is eroding funds for public services – such as the courts, prisons and local Government.
The warning comes amid the Government’s recent decision to increase National Insurance contributions by 1.25 percentage points – as a measure to tackle the ailing care system and a pressured NHS.
The report from the IFS has said this rise announced by the Prime Minister Boris Johnson mere weeks ago may have to more than double by the end of the decade.
Over the course of the next Parliament, this could mean a rise of some 3.15 percent – a staggering sum.
The IFS stated public spending was set to reach 42 percent of national income following the levy announcement. This is two percent above pre-pandemic share levels.
However, the Chancellor is also navigating the challenge of an economic slump, as figures from earlier in the year showed the economy shrunk by 10 percent in 2020.
As a result, there are concerns Mr Sunak will not have enough extra money to spend on certain “unprotected” ministerial departments when it comes to the Budget this month.
Paul Johnson, director of the IFS, said: “Rishi Sunak, a Conservative Chancellor, is presiding over an increase in the tax burden to record levels in the UK and an increase in the size of the state to levels not seen since the days of Mrs Thatcher.
“Yet the combined effects of ever-growing spending on the NHS and an economy smaller than projected pre-pandemic mean that he is still likely to be short of money to spend on many other public services.
“On central forecasts, there will be little or no scope to increase spending on things like local government, the justice system and further education,. “Brinkwire Summary News”.