PwC Issues New NHS Tax Warning

by Jason Gorringe, Tax-News.com, London

23 April 2002

In the wake of Chancellor Gordon Brown's budget international accounting firm, PricewaterhouseCoopers, has warned that additional tax revenue to the tune of £20 billion could be necessary to fund investment in the UK's National Health Service.

In a reaction to the budget released on Friday, John Hawksworth, Head of the Macroeconomics Unit at PwC expressed surprise at the size of the tax increases needed to implement the Wanless Report proposals:

'The NHS spending increases proposed in the Wanless Report go well beyond what commentators, including ourselves, expected,' he explained. 'In the context of the many other upward pressures on public spending, they appear to imply tax increases of the order of £20 billion (at today's GDP values) in total over the next five years, or around £6-7 billion extra in 2006/7 and 2007/8, over and above the amounts announced in today's budget for the next three years.'

Meanwhile, speaking on Friday in defense of the Chancellor's decision to increase national insurance contributions on employers and employees in order to raise extra cash, Prime Minister Tony Blair refused to rule out further tax increases before the next election.

'We have funded the health spending that we have set out and we have shown exactly how we can fund it, but I am not going to sit down and write future budgets now,' he said in a television interview last week, adding that: 'Once you have a consensus, as we do, that our health care system needs more expenditure, there is no free way of raising it.'

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