The government will have to significantly raise taxes to cover the sweeping increases in public spending announced in today’s Spending Review, according to leading audit, tax and business advisory firm Blick Rothenberg.
Robert Salter, a director at the firm, warned that headline commitments such as the £11 billion annual uplift in the defence budget would likely require a 1.5p hike in the basic rate of income tax, if funded directly.
“Given the size of the government’s planned spending increases, significant tax rises are inevitable in the coming months,” said Salter. “The increase in the Defence budget alone is equivalent to a 1.5p rise on the basic rate of income tax.”
The Spending Review, announced by Chancellor Rachel Reeves, included a series of headline-grabbing investments across defence, skills, infrastructure and housing. Among them was a £1.2 billion boost to training and apprenticeships, designed to support Labour’s pledge to create 120,000 new skilled workers by 2030.
While the funding increase is likely to be welcomed by businesses, Salter raised concerns about accessibility: “Sadly in many cases this additional funding may not reach the organisations who need it, because many firms are unable to access training due to the restrictive conditions associated with the apprenticeship levy.”
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