Rachel Reeves is reportedly planning to increase taxes in the upcoming Budget to secure £53 billion of additional funding for the NHS. The Chancellor is said to be determined to protect the boost for the health service “at all costs.” While Defense Secretary John Healey of the Labour Party has declined to confirm a commitment to avoid raising income tax or VAT as stated in their manifesto.
Acknowledging potential repercussions from recent economic projections, Reeves is contemplating raising the basic income tax rate for the first time since 1975. Additionally, she is considering expanding council tax bands to generate more revenue from high-value properties.
Reportedly, the Chancellor’s main objectives are to reduce waiting lists and national debt while ensuring a 2.8% rise in the NHS budget, a target she is unwilling to compromise on. However, her plans were challenged by a 0.3% decrease in the UK’s productivity levels, which is anticipated to result in a £20 billion increase in public sector borrowing without tax adjustments.
Healey emphasized that decisions are pending, citing the significant economic challenges accumulated over the past 14 years under the Tory government. The Chancellor is already facing financial constraints due to escalating borrowing costs and persistent inflation, along with the need to address issues like winter fuel payments and benefit reductions.
Furthermore, adjustments to the controversial two-child benefit restriction are expected to be announced following pressure from MPs and anti-poverty advocates. Keir Starmer’s previous pledge not to raise VAT, national insurance, or income tax is under scrutiny, as he avoided confirming this commitment during recent parliamentary sessions.
The upcoming Budget on November 26 will unveil Labour’s economic strategy, with a focus on strengthening the economy, reducing NHS waiting lists, and fostering a brighter future for the nation.