Country duped again over increased spending for NHS

PUBLISHED: 16:25 17 July 2018 | UPDATED: 16:25 17 July 2018

More bad news: Prime minister Theresa May has been warned there will be no Brexit dividend to fund her increase in NHS funding
Photo: PA / Chris Ratcliffe

More bad news: Prime minister Theresa May has been warned there will be no Brexit dividend to fund her increase in NHS funding Photo: PA / Chris Ratcliffe

PA Wire/PA Images

Claims a boost in NHS spending could be covered by a ‘Brexit dividend’ have been rubbished by the Office for Budget Responsibility.

In a devastating assessment of Britain’s finances it dismissed suggestions that the increased NHS spending could be paid for with extra cash after we leave the EU stating “Brexit is more likely to weaken than strengthen the public finances overall”.

Instead a fiscal “tightening” totalling around £111 billion in today’s money could be needed in 2023/24 to get debt under control, the official forecaster said.

In its Fiscal Sustainability Report, the OBR said that, without changes to tax and spending policy, public sector net debt could rise from 80% of GDP in 2022 to almost 283% by 2067.

The OBR said: “On current policy we would expect the budget deficit to widen significantly over the long term, putting public sector net debt on a rising trajectory as a share of national income.

“This would not be sustainable.”

And it added: “The main lesson of our analysis is that future governments are likely to have to undertake some additional tightening beyond the fiscal plans in place for the next five years in order to address the fiscal costs of an ageing population and upward pressures on health spending.

“Leaving all or part of the June 2018 health spending announcement unfunded would simply require greater action later.”

Announcing her plan for a £20.5 billion annual real-terms rise in health spending by 2023/24 last month, prime minister Theresa May acknowledged that taxpayers “will have to contribute a bit more in a fair and balanced way”.

But she did not put a figure on the increase, and said that some of the extra funding would come from savings from contributions to EU budgets after Brexit.

Asked, following the publication of the OBR report, whether the prime minister still believed there would be a Brexit dividend, May’s official spokesman said: “Yes, there are substantial sums of money which we are currently sending to Brussels. Once we have left the EU, we will no longer have to do so.”

The spokesman declined to discuss possible future tax rises, but said: “It remains a government priority to continue to reduce the debt burden.”

Chancellor Philip Hammond said the report showed that ministers cannot be “complacent” about the need to hold debt down.

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