NHS ‘still the priority’
RISHI SUNAK told Cabinet members that the NHS would be “prioritised” amid “difficult decisions” on spending over the coming weeks, Downing Street said.
The Prime Minister and his Chancellor are currently considering tax rises for millions of households and a squeeze on spending to address a black hole of up to £50 billion in the public finances.
According to a read-out of Tuesday’s Cabinet meeting, Mr Sunak said that the Government “would always support the NHS and that they would continue to be prioritised as difficult decisions are taken on spending”.
The Cabinet meeting saw the Prime Minister and his top team discuss the NHS ahead of impending fresh pressures this winter.
“He said that in return it was right to look at further ways to improve the service the public receive and that he was confident this could be achieved,” according to Downing Street.
Health spending is one of several major areas that could face further spending constrains, as the Government seeks out ways to restore fiscal credibility in the wake of Liz Truss’s ill-fated minibudget.
Mr Sunak and Jeremy Hunt are expected to extend a freeze on the thresholds at which people start to pay the different rates of income tax and national insurance, which could result in more people being dragged into higher tax bands as wages increase.
Mr Hunt will set out his plans in the Autumn Statement on November 17 and is considering splitting the burden equally between tax rises and spending cuts.
Public sector workers could face deep real-terms cuts to wages, with The Times reporting that the Treasury is looking at an increase of 2% across the board for 2023-24, at a time when inflation is expected to be well above that threshold.
A Treasury source told the PA news agency that “no decisions have been taken” and the “independent pay review body process takes place next year”.
Pressure is continuing to mount for an enhanced windfall tax on oil and gas giants to help fill the Treasury coffers.
Cop26 president Alok Sharma, who was demoted from the Cabinet by Mr Sunak, said: “We need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables.”
The warning came as the Resolution Foundation think tank said Mr Sunak and Mr Hunt face an “unpalatable menu” when it comes to rebalancing the nation’s finances.
Unemployment could also rise by around half a million, the report suggests, with the weaker economic outlook bringing borrowing up by around £20 billion a year by 2026-27.
The think tank also suggests the Government could try to choose the so-called “austerity option”, requiring cuts to alreadysqueezed department budgets.