Britain’s finance chief on Wednesday announced a major increase in public spending in what critics have branded a “high-tax, big-spending budget.”
Rishi Sunak, the Chancellor of the Exchequer, said he will increase total departmental spending by £150 billion ($206 billion) by the 2024–25 financial year. “That’s the largest increase this century, with spending growing by 3.8 percent a year in real terms,” he said.
The government is boosting spending on healthcare by £44 billion ($60.5 billion) to over £177 billion ($243.4 billion), he told the House of Commons.
The government said the public spending hike is backed by better-than-expected economic forecasts. “Employment is up. Investment is growing. Public services are improving. The public finances are stabilising. And wages are rising,” said Sunak.
“Today’s budget delivers a stronger economy for the British people: stronger growth, with the UK recovering faster than our major competitors,” he said.
Sunak acknowledged that the tax burden will reach its highest level as a share of gross domestic product (GDP) “since the early 1950s” but insisted “I don’t like it” and stressed there have to be limits to the scope of the state.
The Chancellor announced £7 billion ($10 billion) in business rate cuts, with the cancellation of next year’s planned increases and a 50 percent discount on business rates for a year for a series of retail and hospitality venues.
Other reforms to corporate taxes included slashing the surcharge on bank profits from 8 percent to 3 percent.
Sunak promised a new, lower rate of air passenger duty on domestic flights within the UK, benefiting nine million passengers and helping regional airports.
Commenting on the budget, the Adam Smith Institute, a London-based free market think tank, said: “This high-tax, big-spending budget is largely bankrupt of inspired policy.”
“The Conservatives seem to be out of new ideas, instead sticking to the tired old ‘tax and spend’ playbook,” said Daniel Pryor, the institute’s Head of Programmes. “Where they see a problem, they reach for your wallet.”
The Institute of Economic Affairs (IEA), another free market think tank, called it “another high spending Budget from a government which continues to use most of its available headroom to increase expenditure rather than to cut taxes.”
IEA Director General Mark Littlewood said the “eye-watering national debt” will continue to grow in cash terms because “there is no plan to run a budget surplus in the coming years.”
“The Chancellor is banking on strong economic growth to sustain the many additional billions of pounds of spending he has pledged.”
But Littlewood predicted that the UK’s post-COVID-19 recovery will be “sluggish” amid soaring state spending and “the absence of meaningful tax cuts and deregulation.”
PA contributed to this report.