{"id":178661,"date":"2025-06-12T15:08:11","date_gmt":"2025-06-12T15:08:11","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/178661\/"},"modified":"2025-06-12T15:08:11","modified_gmt":"2025-06-12T15:08:11","slug":"britain-is-now-a-gnats-whisker-from-tax-rises-as-state-mushrooms-politics-news","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/178661\/","title":{"rendered":"Britain is now a ‘gnat’s whisker’ from tax rises as state mushrooms | Politics | News"},"content":{"rendered":"

The Chancellor<\/a> is meeting her fiscal rules by a \u201cgnat\u2019s whisker\u201d and a move in the wrong direction will \u201calmost certainly\u201d result in tax increases<\/a>, one of Britain\u2019s most respected economists has warned. Paul Johnson, director of the Institute for Fiscal Studies<\/a>, cast doubt on whether Rachel Reeves\u2019s<\/a> cash injections into the NHS<\/a> will allow the Government to fix the waiting lists crisis and fund its workforce plan.<\/p>\n

He said: \u201cMs Reeves is now going to have all her fingers and all her toes crossed, hoping that the OBR will not be downgrading their forecasts in the autumn. With spending plans set, and \u2018ironclad\u2019 fiscal rules being met by gnat\u2019s whisker, any move in the wrong direction will almost certainly spark more tax rises.\u201d<\/p>\n

He shot down claims that economic forecasts and the nation\u2019s finances<\/a> have improved compared to the \u201cgenuinely difficult\u201d situation a year ago. \u201cRather the reverse,<\/a>\u201d he said. Under Rachel Reeves<\/a>\u2019s plans, he said, \u201cspending will be growing faster than the economy<\/a>\u201d. As a share of national income, spending by Government departments will jump from 18.6% in 2019-20 to 21.5% in 2028-29.<\/p>\n

Mr Johnson described this as a \u201csubstantial increase in the size of the state\u201d. Far from being a period of austerity, he described it as the \u201cdecade of a growing state\u201d.<\/p>\n

He warned that the 3% increase a year in NHS funding means this \u201cleft very little to share out among other departments\u201d. Spending by the Department<\/a> of Health and Social Care<\/a>, he said, has rocketed from \u201caround a quarter of day-to-day public service spending to a quite remarkable 40% per cent since the turn of the millennium\u201d.<\/p>\n

He added: \u201cOne has to question for how much longer this relentless increase can continue.\u201d<\/p>\n

Even so, despite the huge investment in health<\/a>, Mr Johnson warned more cash may be needed to fund the NHS.<\/p>\n

He said: \u201cGrowth of 3% a year is below the historic average. It may not even prove enough to fund the official workforce plan and it is at best marginal whether it will be enough to achieve the Government\u2019s waiting list<\/a> targets.\u201d<\/p>\n

Mr Johnson also argues greater investment may be needed in defence<\/a>.<\/p>\n

He said: \u201cDefence<\/a> spending is rising to 2.5% of national income by 2027, but no increase thereafter. Given external demands and Government promises to get it to 3% of GDP at an unspecified date in the next parliament, there will be pressure to increase it further.<\/p>\n

\u201cAnd that\u2019s before any increase in the NATO<\/a> spending target to more like 3.5%, which this Government would presumably feel under some obligation to move towards.\u201d<\/p>\n

The economist also warned that the \u201cschools’ budget<\/a> looks tight\u201d when there is growing pressure to help children with special educational needs.<\/p>\n

He said: \u201cOutside of additional spending on free school meals<\/a> it is essentially flat in real terms. Falling pupil numbers should give some room for manoeuvre and result in a modest real increase in per pupil funding, but absent some serious cost-saving reforms, ever-growing spending on special educational needs is likely to swallow much \u2013 or perhaps all \u2013 of that funding growth.\u201d<\/p>\n

He also cautioned there could be \u201ctrouble ahead\u201d if trade unions are not satisfied with pay increases \u201cbroadly in line with inflation\u201d.<\/p>\n

There is the further risk the Government may have to respond to emergencies with little cash in its rainy-day fund.<\/p>\n

Mr Johnson said: \u201cThe Treasury\u2019s reserve has been pared right back and is lower than it has been in recent years, leaving little space to deal with unforeseen pressures.\u201d<\/p>\n

When it comes to capital spending, he said there are \u201chands down clear priorities\u201d with \u201ca 48% increase in the real terms defence capital budget and a cool 140% for energy and net zero\u201d.<\/p>\n

He said: \u201cTransport<\/a> does really quite poorly despite the slew of announcements \u2013 though that\u2019s in part due to lower spending on the disaster that is HS2<\/a>.\u201d<\/p>\n

Mr Johnson said childcare support has \u201cturned out a lot more expensive than forecast\u201d.<\/p>\n

He said: \u201cSpending plans for last year had already needed to be revised upwards by \u00a3500million, or more than a quarter,\u201d adding: \u201cIt seems parents are even more keen on taking up free provision than expected \u2013 especially those with children under the age of two.<\/p>\n

\u201cAdding new legs to the welfare state is an expensive<\/a> business.\u201d<\/p>\n

And he warned more council taxes are on the way. He said the spending review \u201cassumes that council tax bills will rise by 5% a year\u201d.<\/p>\n

He said: \u201cIndeed, if English councils do choose 5% increases \u2013 and most are likely to \u2013 bills look set to rise at their fastest rate over any parliament since 2001-05. That might not be so bad if it weren\u2019t for the fact that those bills are based on property values in 1991, and that the system is regressive.<\/p>\n

\u201cHere\u2019s another plea to reform council tax. If you are going to increase your reliance on it surely you are under even more of an obligation to reform it into something more rational.\u201d<\/p>\n

He sounded a sceptical note about the Chancellor\u2019s<\/a> determination to make efficiency savings, saying: \u201cWe can\u2019t find any particular area of spending the government has decided it wants to withdraw from \u2013 other, perhaps, than overseas aid.\u201d<\/p>\n

Mr Johnson said \u201cvirtually every department is ripe for exactly the same cut in its administration budgets \u2013 10% for all of them over the three years to 2028-29 and then another 5% in one year, 2029-30 \u2013 irrespective of how much they might have grown recently, and irrespective of planned spending increase\u201d.<\/p>\n

\u201cThat is not the result of a serious department-by-department analysis,\u201d he warned, adding he hesitated to \u201caccuse the Treasury of making up numbers, but\u2026\u201d<\/p>\n

Mr Johnson expects the Government will change its spending plans, pointing out that day-to-day increases of just 1% are expected in 2027-28 and 2028-29.<\/p>\n

He said: \u201cIf that last year\u2019s spending plans aren\u2019t topped up at some point I\u2019ll be very surprised indeed.\u201d<\/p>\n

Mr Johnson said he was \u201cbaffled\u201d by the Chancellor\u2019s speech on Wednesday, saying: \u201cIt did not appear to be a serious effort to provide any useful information to anybody.\u201d<\/p>\n

But he said she has had \u201csome incredibly tough decisions to take and balancing acts to perform\u201d and she has made a \u201cperfectly reasonable set of prioritisations\u201d.<\/p>\n

The real test, he concluded, will be \u201chow well the money is spent\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"The Chancellor is meeting her fiscal rules by a \u201cgnat\u2019s whisker\u201d and a move in the wrong direction…\n","protected":false},"author":2,"featured_media":178662,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5018,3,4],"tags":[748,1700,393,73651,4884,211,73650,1144,73648,712,1523,16,73649,15,1764],"class_list":{"0":"post-178661","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-britain","8":"category-uk","9":"category-united-kingdom","10":"tag-britain","11":"tag-economy","12":"tag-england","13":"tag-government-spending","14":"tag-great-britain","15":"tag-nhs","16":"tag-nhs-funding","17":"tag-northern-ireland","18":"tag-paul-johnson","19":"tag-scotland","20":"tag-taxes","21":"tag-uk","22":"tag-uk-tax-rises","23":"tag-united-kingdom","24":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114671026919313452","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/178661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=178661"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/178661\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/178662"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=178661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=178661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=178661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}