OBR warns tax rises will be required to fund health service spending

19 Jul 2018

In its latest Fiscal Sustainability Report (FSR), the Office for Budget Responsibility (OBR) has warned that tax rises or spending cuts will be required in order to fund planned increases in the NHS budget.

The government recently outlined plans to boost its health budget partly by way of a so-called ‘Brexit dividend’ – by 2023/24, it hopes to contribute £20 billion a year to the NHS in England. However, according to the OBR, Brexit is ‘more likely to weaken than strengthen’ public finances.

Responding to the OBR’s warning, the Treasury said: ‘The government will fund this five-year commitment while continuing to meet its fiscal rules and reduce debt. Taxpayers will need to contribute a bit more in a fair and balanced way.’

Within its report, the OBR also stated that public finances are ‘likely to come under significant pressure’ in the long-term, as a result of the UK’s ‘ageing population’ and ‘upward pressure on health spending’.

The fiscal watchdog revealed that the current long-term outlook for UK public finances is now ‘less favourable’ than at the time when its last FSR was published in January 2017.