Britain is turning into a “National Health State”, a think tank has said after the Chancellor gave the NHS a major funding boost in her spending review.
The health service was the big winner of Wednesday’s spending review, receiving an extra £29 billion per year for day-to-day spending and more cash for capital investment.
Overnight, the Resolution Foundation said Rachel Reeves’s announcements had followed a recent trend that saw increases for the NHS come at the expense of other public services.
Ruth Curtice, chief executive of the Resolution Foundation, said: “Health accounted for 90% of the extra public service spending, continuing a trend that is seeing the British state morph into a National Health State, with half of public service spending set to be on health by the end of the decade.”
Defence was another of Wednesday’s winners, Ms Curtice said, receiving a significant increase in capital spending while other departments saw an overall £3.6 billion real-terms cut in investment.
The Institute for Fiscal Studies (IFS) made similar arguments about “substantial” investment in the NHS and defence coming at the expense of other departments, although the think tank’s director Paul Johnson warned the money may not be enough.
He said: “Aiming to get back to meeting the NHS 18-week target for hospital waiting times within this Parliament is enormously ambitious – an NHS funding settlement below the long-run average might not measure up.
“And on defence, it’s entirely possible that an increase in the Nato spending target will mean that maintaining defence spending at 2.6% of GDP no longer cuts the mustard.”
Ms Curtice added that low and middle-income families had also done well out of the spending review “after two rounds of painful tax rises and welfare cuts”, with the poorest fifth of families benefiting from an average of £1,700 in extra spending on schools, hospitals and the police.
She warned that, without economic growth, another round of tax rises was likely to come in the autumn as the Chancellor seeks to balance the books.
She said: “The extra money in this spending review has already been accounted for in the last forecast.
“But a weaker economic outlook and the unfunded changes to winter fuel payments mean the Chancellor will likely need to look again at tax rises in the autumn.”
Speaking after delivering her spending review, Ms Reeves insisted she would not have to raise taxes to cover her spending review.
She told GB News: “Every penny of this is funded through the tax increases and the changes to the fiscal rules that we set out last autumn.”
