Philip Hammond says taxes will increase to pay for NHS spending boost
Philip Hammond will warn that taxpayers face picking up the bill for the Government’s planned NHS funding boost rather than an increase in borrowing.
The Chancellor will intervene publicly for the first time since Theresa May announced the £20bn increase, spread over four years, by reaffirming his commitment to reducing the nation’s debt.
It comes amid mounting pressure on the Government to explain how the proposal will be funded, as economists dismiss the role of a “Brexit dividend” by arguing that the costs to the economy of leaving the EU outweigh any reduction in payments to the bloc.
Meanwhile the Conservatives risk accusations of shattering a major manifesto promise should they hike taxes or increase borrowing.
However the Chancellor will tell an audience at the Mansion House in the City that British people “will have to contribute a bit more”.
"We are getting debt down, while investing in Britain's infrastructure, supporting our vital public services, and helping hard working families across the United Kingdom," he will say.
"And this week, the prime minister announced a five year NHS funding package that will boost spending on health by over £20bn a year in real terms in England alone.
"So, as the prime minister said, across the nation taxpayers will have to contribute a bit more in a fair and balanced way to support the NHS we all use.
"We also confirmed we would stick to our fiscal rule and continue to reduce debt."
Elsewhere Mr Hammond will reaffirm his intention to reduce the deficit to 2% of GDP by 2021.
And he will announce plans to sign a series of financial partnerships with non-EU countries in a bid to ensure London remains a major gateway to financial markets.
He will tell City officials that "ground-breaking" financial partnerships with governments around the world are being pursued while Britain quits the bloc.
"Connectivity was always at the heart of London’s success. To succeed in the future, we must remain connected to the world – including the important emerging markets," he will say tomorrow.
"So while some question the benefits of openness […] being open to the world – and being a global capital of finance – will continue to be foundation of the UK’s economic success."