Rishi Sunak and Boris Johnson have overseen largest tax rises since Second World War – thinktank
Rishi Sunak and Boris Johnson have overseen the largest set of tax rises since the Second World War, according to economic analysis.
The Institute for Fiscal Studies (IFS) estimates that – by the time of the next general election – the tax burden will have risen to around 37% of national income.
This equates to roughly £3,500 extra per household – although the increase is not shared evenly.
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Records began in 1950 for the figures, and no parliament has seen a larger hike.
The size of the tax burden and the lack of cuts to tariffs have been the subject of the ire of many Conservatives.
The headroom for tax cuts has suffered as interest rates rose and the cost to service debt has risen. High inflation has led the government to be cautious of cutting taxes and leaving people with more cash to spend.
Last week, Chancellor Jeremy Hunt said it would be “virtually impossible” to cut taxes at the moment.
“I really, really wish it was true but unfortunately, it just isn’t,” he told LBC.
“If you look at what we are having to pay for our long-term debt, it is higher now than it was at the spring budget.
“I wish it wasn’t, it makes life extremely difficult, it makes tax cuts virtually impossible, and it means that I will have another set of frankly very difficult decisions.
“All I would say is, if we do want those long-term debt costs to come down, then we need to really stick to this plan to get inflation down, get interest rates down.
“I don’t know when that’s going to happen. But I don’t think it’s going to happen before the autumn statement on November 22, alas.”
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There will likely be pressure for Mr Hunt and Mr Sunak to cut taxes – with some eyeing up cuts to sizeable projects like HS2 as a way to free up cash, and others calling for a relaxation of inheritance tax.
The economy is an area that Mr Sunak wants to make his strength – with three of his five pledges made at the start of this year relating to them.
Ben Zaranko, senior research economist at the IFS, said the pandemic could not be blamed for rising tax levels and predicted a high-tax approach was here to stay regardless of who wins the next general election.
“It is inconceivable that this parliament will turn out to be anything other than a tax-raising one – and it looks nailed on to be the biggest tax-raising parliament since at least the Second World War,” he said.
“This is not, for the most part, a direct consequence of the pandemic. Rather, it reflects decisions to increase government spending, in part driven by demographic change, pressures on the health service, and some unwinding of austerity.
“It is likely that this parliament will mark a decisive and permanent shift to a higher-tax economy.”
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‘The plan is working’
This was echoed by Mark Franks, the director of welfare at the Nuffield Foundation.
He said: “There will be strong pressure in coming parliaments to raise taxes further to meet growing demand for public services such as healthcare.
“Future governments must not only have a credible and robust strategy for the economy and the public finances, but should also be forthright and transparent about the difficult trade-offs they will face.”
Opposition parties seized on the findings, as Labour said that the Tories had “clobbered” the public.
Shadow chief secretary to the Treasury Darren Jones said: “Successive Tory governments have overseen 13 years of low growth and stagnant wages. Their response in the face of this bankrupt legacy is always to load their failure onto working people. And what are we getting back? Crumbling public services.
“Brits are working hard but getting clobbered with 25 Tory tax rises and a continuing Conservative premium on their household budgets.”
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A Treasury spokesperson said: “Despite needing to take the difficult decisions to restore public finances in the face of the dual shocks of the pandemic and Putin’s illegal invasion of Ukraine, the latest data shows our tax burden will remain lower than any major European economy.
“Driving down inflation is the most effective tax cut we can deliver right now, which is why we are sticking to our plan to halve it, rather than making it worse by borrowing money to fund tax cuts.
“We have also taken 3 million people out of paying tax altogether since 2010 through raising personal thresholds, and the chancellor has said he wants to lower the tax burden further – but has been clear that sound money must come first.”
The suspended surgeon at Addenbrooke’s Hospital in Cambridge has been named as paediatric consultant Kuldeep Stohr.
Eight hundred patients operated on by Ms Stohr are having their cases urgently re-examined, after an external review found nine children whose care fell below expected standards.
The initial review was ordered after concerns were raised by her colleagues.
Sky News has seen a copy of the interim report which details several issues relating to complex hip surgeries performed by the surgeon.
One of the parents whose child was identified in the review showed us a recent letter from the hospital which reported “problems with both judgement and technique” in her child’s surgery.
Ms Stohr, who has been suspended since the end of January, said in a statement: “I always strive to provide the highest standards of care to all my patients.
“I am co-operating fully with the trust investigation and it would not be appropriate to comment further at this time.”
Tammy Harrison: ‘It was hell’
Left in agonising pain
Tammy Harrison, 12, has cerebral palsy and had surgeries carried out by Ms Stohr. Her operations didn’t work, leaving her in agonising pain.
She said: “My first one was just like trauma. I couldn’t get out of bed for eight weeks. I was either stuck in bed or stuck on the sofa. It was hell.”
Her mum, Lynn, told Sky News: “There is nothing that can put Tammy back to where she was now and that’s the sad thing.
“If I could just click my fingers and have the child back that I had I would do it with a blink of an eye.”
Ms Stohr operated on Lynn Harrison’s daughter
So far, there’s been no confirmation of any wrongdoing in Tammy’s care.
But her family have a meeting at the hospital this week to find out more.
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The trust has asked a panel of specialist clinicians to review all the planned operations carried out by Ms Stohr at Addenbrooke’s. One hundred emergency trauma cases will also be looked at.
Addenbrooke’s is a major regional trauma centre and treats serious emergency patients from all over the region.
One clinician at the hospital told Sky News that the review of so many patients was “creating a lot of extra work”, which was “slowing things down” for other patients awaiting treatment.
Addenbrooke’s Hospital. File pic: PA
At least one extra locum consultant has been helping the team, as they work through the caseload.
Trust apologises
Sky News has been told Cambridge University Hospitals Trust had wanted to identify Ms Stohr before but had been threatened with a legal injunction.
The trust has apologised unreservedly to families and patients. But what’s troubling many is the fact concerns were raised about Ms Stohr a decade ago.
Chief executive of Cambridge University Hospitals Trust, Roland Sinker, has set up another review to examine whether opportunities were missed, and action could have been taken sooner.
The Department of Health described the ongoing situation as “incredibly concerning.”
Sir Keir Starmer promised “bold changes” as he announced he will relax rules around electric vehicles after carmakers were hit by Donald Trump’s tariffs.
The prime minister said “global trade is being transformed” after the US president‘s 25% levy on imported cars, and 10% tariff on other products, came into force.
Jaguar Land Rover has said the firm will “pause” shipments to the US as it looks to “address the new trading terms”.
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Labour made a manifesto pledge to restore a 2030 ban on the sale of new petrol and diesel cars after it had been rolled back to 2035 by Rishi Sunak’s Conservative government.
Starmer promises to ‘back British business’. Pic: Reuters
Sir Keir will officially confirm the ban in an announcement on Monday but regulations around manufacturing targets on electric cars and vans will be altered, to help firms in the transition.
Luxury supercar firms such as Aston Martin and McLaren will still be allowed to keep producing petrol cars beyond the 2030 date, because they only manufacture a small number of vehicles per year.
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‘Nothing off the table’ over tariffs
Petrol and diesel vans will also be allowed to be sold until 2035, along with hybrids and plug-in hybrid cars.
The government is also going to make it easier for manufacturers who do not comply with the government’s Zero Emission Vehicle (ZEV) mandate, which sets sales targets, to avoid fines, and the levies will be reduced.
Sir Keir said: “I am determined to back British brilliance.
“Now more than ever UK businesses and working people need a government that steps up, not stands aside.
“That means action, not words.”
Officials have said support for the car industry will continue to be kept under review as the full impact of the tariffs announced last week becomes clear.
Transport Secretary Heidi Alexander said the industry deserves “clarity” in the economic context.
She said: “Our ambitious package of strengthening reforms will protect and create jobs, making the UK a global automotive leader in the switch to EVs, all the while meeting our core manifesto commitment to phase out petrol and diesel vehicles by 2030.”
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Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the government had “recognised the intense pressure manufacturers are under”, while Colin Walker, a transport analyst at the Energy and Climate Intelligence Unit, said the ZEV mandate is a “global success story” in driving a surge in sales of electric vehicles.
It comes as KPMG warned US tariffs on UK exports could see GDP growth fall to 0.8% in 2025 and 2026.
The accountancy firm said higher tariffs on specific categories, such as cars, aluminium and steel, would more than offset the exemption on pharmaceutical exports, leaving the effective tariffs imposed on UK exports at around 12%.
Yael Selfin, chief economist at KPMG UK, said: “Given the economic impact that tariffs would cause, there is a strong incentive to seek a negotiated settlement that diminishes the need for tariffs. The UK automotive manufacturing sector is particularly exposed given the complex supply chains of some producers.”
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