Hammond’s ‘£13bn Budget windfall’ eases pressure for tax rises
Better-than-expected public finances may help the Chancellor avoid a tax hike to pay for promises on the NHS.
Chancellor Philip Hammond is in line for a multibillion-pound Budget “windfall”, easing the pressure on him to raise taxes to fund the NHS, it has been reported.
The Financial Times said revisions to the independent Office for Budget Responsibility’s (OBR) forecasts for the public finances were set to reduce the deficit for 2018-19 by around £13 billion.
The changes could help the Chancellor avoid unpopular tax increases to pay for the Government’s promises on health when he delivers his Budget in the Commons on Monday.
Theresa May pledged earlier this year to raise an additional £20 billion a year for the NHS in England by 2023.
However, any move to put up taxes could be politically risky for ministers at a time when the Government is under intense pressure from Tory MPs over the Brexit talks.
The FT said the revisions to the OBR forecasts – due to stronger-than-expected tax receipts – represented the largest annual adjustment to the borrowing forecasts since the data were first produced in 1982-83.
An OBR report last week noted that receipts from income tax, national insurance contributions, VAT and alcohol duties were all up on previous forecasts while Government borrowing was lower than expected.
“With receipts growth exceeding expectations across most of the major taxes, this raises the possibility that current estimates of nominal GDP growth may in time be revised higher,” it said.
While “mechanically extrapolating” the figures would suggest the deficit for 2018-19 would be £11 billion lower, the report said that did take not account of the recent strength of corporation tax receipts which have yet to feed into the borrowing figures.
The Treasury declined to comment on the report, describing it as “speculation”.