The Budget: a taxing time for the NHS as Hunt looks elsewhere for electoral boost

Pre Election Budget Image


By Kieran Lucia, Senior Director

Westminster is focused on tax cuts; the NHS is crying out for funding; but what do the public want?

The Budget today could well have been the final fiscal event before the next General Election. For a government trailing the opposition in the polls by record margins, we would expect this to be the moment to squeeze every available pound towards the priorities that will shape the public’s decisions at the next election: so, what does the public want?

Whilst murky, a clearer answer to this question is emerging. The NHS now tops the list as the biggest issue facing the country in the long running Ipsos Issues Index. In general, the public choose spending over tax cuts (although that’s not necessarily the case for the 2019 Conservative Voters the Government most needs to win).

The Chancellor has attempted to meet this demand with the NHS Productivity Plan (funded from 2025/26 onwards). Much of this will theoretically be welcome to frontline clinicians and patients – the NHS’s IT is badly outdated and is a serious drag on productivity. However, the irony of this announcement coming only weeks after a £1bn raid on the NHS’s capital budget will not be lost on those tasked with boosting NHS productivity. Bets on making the future NHS more efficient are unlikely to pay off this side of the election. Given where voters’ concerns are, this may well be the Chancellor’s big gamble.

Despite the intervention today, at the macro level, the Government’s strategy has been clear since the Autumn Statement: tax cuts in the Autumn, tax cuts today and (possibly) more tax cuts later in the year. Jeremy Hunt’s announcement of a further 2p cut to National Insurance means that he has chosen to put almost the entire (real and perceived) fiscal latitude at his disposal into cutting taxes, rather than investing in public services. The additional extra £2.5bn to stop a fall in real terms NHS spending was a sidenote to the narrative for a reason. Cuts to taxes have won out over cutting waiting lists.

The Opposition are, with impressive discipline, following much of this fiscal narrative (admittedly, for very different reasons). The Labour Party – mindful of unhappy electoral experiences – are fearful of fighting an election on tax and spend. If the Government promise to cut almost any tax (inheritance tax being a likely exception), however fanciful it is that they could ever meaningfully be implemented after an election, then Labour will not oppose them now.

Ahead of this Budget, there has been much comment about gaming of the Government’s fiscal rules, the combination of cuts to public services and deferred big ticket spending items, and the ‘traps’ this leaves for a potential Labour Government (to name just a few, see Ben Zaranko from the IFS, Sam Freedman and Esther Webber from Politico). Leaving all that this says about the workings of the UK state side, is anything we’ve heard today delivering what the public actually want from their current or prospective government?

The NHS will be a major issue in the election. The public will be deciding on who they trust to set the NHS on a path to recovery. Yet the Conservatives still don’t have a retail offer on health, and it’s become much harder for Labour to deliver on their (relatively unambitious) ones whilst sticking to their own fiscal rules. Politicians on all sides still have the opportunity to shape what they offer the public on the NHS during an election. Given the polls, it might be time to seize it.