But a spokesperson said public spending would end up higher by 2028-29 than it was in 2019-20, even accounting for inflation. “That’s the number one mission of an incoming Labour government,” she said.ĭespite cutting the rate of national insurance, overall levels of taxation are set to reach the highest level in 75 years, while inflation remains high and economic growth struggles for momentum.Īgainst this backdrop, the Resolution Foundation said it expected the average household to suffer a £1,900 hit to their finances by January 2025 compared with their position in December 2019, with families on course to be worse off at the end of a parliamentary term for the first time in modern history.ĭefending his plans for the economy during a round of interviews on Thursday morning, Hunt acknowledged tax levels were rising, but said: “I did make a start in bringing down the tax burden, we can’t do it all in one go.”ĭowning Street did not deny that big cuts would be needed to stick to the chancellor’s fiscal rules. Rachel Reeves, the shadow chancellor, said on Thursday the party would focus on growing the economy to fund public services. Labour has backed Hunt’s tax reductions, having agreed the tax burden on working households was too high. “We know this is a trap it’s the same one the Tories set us in 1997,” said one Labour MP, highlighting how Tony Blair went into that election pledging to match the spending limits set by John Major. The numbers present a potential trap for Labour as Keir Starmer’s party faces increasing questions over how it would turn around struggling public services without adding to borrowing or putting up taxes. ![]() Leading economists said the government spending plans lacked credibility amid ballooning demand on public services – pointing to record NHS waiting lists, pressure on prisons and courts, and rising needs in social care. Mr Hunt, or his successor, will have no such luxury,” he said. Mr Osborne made his cuts after a decade of big spending increases. Doing it again will be more painful still. ![]() ![]() The IFS director, Paul Johnson, said major cuts would be harder to achieve because of the era of austerity kickstarted by the former chancellor Osborne when the Conservatives came to power after the financial crisis. Those likely to suffer the most are further education, local government, prisons and the courts. While the government is committed to funding for key areas – including the NHS, schools, defence and overseas aid – economists said unprotected departments would face deep reductions in their budgets without a rapid change in course. Having sought to blunt the highest tax levels since the second world war, details contained in the chancellor’s plans showed persistently high inflation would slash almost the same amount from public service spending power by 2027.
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