LONDON – Finance Minister Rishi Sunak will set out next month how he will squeeze spending money on Britain’s top government after announcing a major tax increase to fund health and social care on Tuesday.
The British budget deficit hit a period of 14% of total domestic production per year to March due to COVID-related spending, and since then Sunak has introduced the largest tax increase program since the 1970s to help reduce the gap.
On October 27 he will present the annual budget statement and three-year budget, in which the majority of Ministers have been told to set aside savings, the Treasury said.
Prime Minister Boris Johnson has announced an annual $ 12 billion ($ 16.55 billion) tax increase, using long-term difficulties in social grants to justify tax increases that will be heavily used for health services.
The Treasury Department has said that the day-to-day inflation target for inflation will increase by about 4% a year during the current five-year parliament, the largest increase in spending in any parliament since 2001.
Sunak is looking at rising public spending and temporary tax cuts over the past 18 months to protect the British economy from the devastating effects of the coronavirus epidemic.
Sunak said his Spending Review would keep public funds in a sustainable manner and he did not think that more money would be spent than had been said so far.
Government departments will need to identify at least 5% cuts from the daily budget to free up investment in priority areas, the Treasury said.
In March, Sunak announced a significant future increase in organizational taxes and a ban on tax evasion.
With Tuesday’s increase in national insurance, these prices have risen sharply since the mid-1970s, according to the Resolution Foundation’s think tank.
“Boris Johnson has lowered taxes on conservatism out the window, raised taxes on working people to support the massive increase in NHS spending, and protected the assets of wealthy families in the cost of social care,” Resolution Foundation think tank chief executive Torsten Bell said.
Johnson’s plan includes a cap of 86,000 pounds for people who pay for their care.
The Institute for Fiscal Studies, another think tank, said the new public spending announcements would still cost the public sector more than 2-3 billion pounds annually than planned by the government before the epidemic.
“With the existing obligation in areas such as schools, defense and overseas, some areas can expect their budget to remain wide over the next two years,” said IFS economist Ben Zaranko.
“If infection-related spending needs to be funded from these costs – for example rescuing taxi drivers – some areas may be facing cuts.”
Sunak said more spending could be needed in different circumstances given the uncertain nature of the epidemic.