BORIS Johnson will need to treble the NICs tax raid to keep funding the endlessly ballooning NHS budget, top economists have warned.
The Institute for Fiscal Studies also torpedoed hopes of a pay hike, warning Covid will leave the economy 3 per cent smaller and wage growth “weak”.
While Rishi Sunak may have to cut billions from the budgets of prisons, courts and local government as he struggles with monster levels of debt, the boffins said.
The IFS said Brits are struggling with the biggest tax burden in peacetime history after the PM’s decision to raise NICs by 1.25 per cent to pay for health and social care.
But they warned ministers will have to hike the levy to a massive 3.15 per cent to cope with the ever-expanding demands of an aging population – or face having to make politically toxic cuts to the NHS.
Carl Emmerson, deputy director of the IFS, said: “In terms of the pressures on the health and social care budget, it seems to us that between 2025 and 2030 one could imagine needing to find an extra £19billion.
“You can do that in lots of different ways – but if you just use the health and social care levy from that tax you will need to increase it from 1.25% to something like 3.15%.
“That wouldn’t be a tax rise in this Parliament. It would be a tax rise to meet the pressures in 2025 and 2030.”
Paul Johnson, director of the IFS, warned the only alternative would be massively controversial cuts.
He said: “The only other big option is to significantly change the offer on health and pensions in a direction which I think, politically, will be really quite difficult.”
Health spending is set to gobble up a massive 44 per cent of the entire public spending budget by 2025 – up from 32 per cent in 2010.
In a wide-ranging assessment of the state of the country’s finances, the IFS said Britain’s economy enjoyed a “spectacular rebound” from Covid thanks to the vaccine rollout.
But significant economic “scarring” will leave UK plc between 2 and 3 per cent smaller than it would have been by 2025, they warned.
This will leave wages quite low across the economy – although some workers in shortage professions – like lorry drivers – will enjoy “rapid wage growth”, they said.
It raises serious doubts over Boris’ claim to be moving Britain to a high wage economy by bearing down on immigration.
Sky-high debt, rising inflation and huge spending commitments in areas like health and schools means the Chancellor may have to make cuts in non-priority areas like justice and the courts when he announces the Budget later this month, they added.
