The devolved administrations have called on new Chancellor Nadhim Zahawi to provide additional budgetary funding to address spiralling inflation.
The letter, signed by the Welsh Government’s Finance Minister Rebecca Evans, the Scottish Government’s Cabinet Secretary for Finance, Kate Forbes, and Minister of Finance for the Northern Ireland Executive, Conor Murphy, also calls for targeted support for the most adversely impacted in society from the cost of living crisis rather than “reducing broad-based taxes."
It comes as new research from the Centre of Economic and Business Research (Cebr) shows higher tax receipts for the Treasury could leave the next Prime Minister with extra cash of £60bn by 2024-25.
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The joint letter to the Chancellor says: “Due to inflationary pressures, our budgets for the next three years are now worth considerably less than when we formulated our spending plans last year. In addition to the public pay bill and the rising public energy costs, there are other significant emerging pressures for our services, including education and enabling NHS recovery and reform. Our budgets should be uplifted in line with these pressures. The NHS turns 75 next year and this presents a much needed opportunity to boost funding for the service which so many of us rely on. We would urge you to consider these issues and take the steps needed to address these significant concerns.”
The finance ministers said while their respective governments continue to maximise support for households impacted by the cost of living crisis, the levers which can make the biggest difference sit with the UK Government.
They added: “Whilst we recognise the measures taken by the UK government to date have relieved some of the pressure on households, further action is required to address significant gaps in support for vulnerable households, families, businesses and the delivery of services. The prospect that the autumn energy price cap increase will be more than anticipated will only add to the pressures they are facing. The UK government must also take more concerted steps to ensure more sustainable energy prices in the longer-term.
“The cost of living crisis is not evenly distributed, and the focus should be on providing targeted support to those most adversely impacted, rather than reducing broad-based taxes. Neither should tax cuts result in tighter controls on spending which will impact on delivery of public services which are already facing immense pressures.”
With independent pay review panels looking at public sector pay, they said maintaining a fiscally sustainable and prudent approach to public finances is “in all of our interests.”
However, they added: “It is also essential to treat the public sector workforce fairly. As former Education Secretary, you recognised the risks of potentially significant real price pay cuts and placed importance on valuing our public sector workers who have played a vital role in delivery of our collective priorities and in responding to the pandemic. These will be important considerations as the UK Government develops its approach. We need a fair and appropriate response on public sector pay and urge you to give firmer assurances on sensible pay uplifts for our public sector workers.”
A Treasury spokesperson said: “We understand that people are struggling with rising prices which is why we have acted to protect the eight million most vulnerable British families through at least £1,200 of direct payments this year with additional support for pensioners and those claiming disability benefits.
“Through our £37bn support package we are also saving the typical employee over £330 a year through this month’s National Insurance cut, allowing people on universal credit to keep £1,000 more of what they earn and cutting fuel duty by 5p – the biggest ever cut to fuel duty rates which saves a typical family £100.”
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