Contrary to all the widely circulated gloom, the Budget did not raise income tax or national insurance rates to pay for the NHS pledge. Instead, the Chancellor used the additional £11.3 billion head room he was given by the Office for Budget Responsibility not only to give the promised money to the NHS but also to bring forward by one year the increase in personal allowance to £12,500 and the higher rate tax band threshold to £50,000.
There were of course a number of tax rises (such as the IR35 changes) which were less high profile, reflecting the perilously small majority that the Government has in the House of Commons. This was never likely to be a dramatic budget because the Government has neither the authority nor the majority to carry this out.
The Budget gives a hostage to economic events as if there is a downturn, then the figures of borrowing could look worse than projections. The second hostage is that, with the exception of the NHS and Universal Credit, the additional sums for other departments are very low which could cause problems which may require extra emergency money.
For the longer term, the major gamble is that the extra money for the NHS will provide an appreciably better service. As the NHS will by 2023/34 account for 38% of Government expenditure there would seem to be little room for manoeuvre if the expenditure does not lead to a stable health service. At that point the government would need to think about some serious changes to the structure and funding of the health service; and the time for kicking the can down the road would be well and truly over.
