Government must find £19bn to cover spending pledges

An extra £19bn a year would have to be found for the government to deliver on promises to increase public spending the Institute for Fiscal Studies says in its 2018 Green Budget.

Further unless there are substantial tax rises or economic growth outstrips forecasts the prime minister’s aim to end austerity is unlikely to be compatible with the chancellor’s aim to balance the books by the mid-2020s.

Raising tax revenue by 1% of national income would cover £19bn in new spending but would put the tax burden at its highest level since 1945. The figure would though place the UK near the middle of the OECD countries.

The IFS says there are several options for increasing taxes in ways that would affect ‘relatively well-off members of the older generation’ and in general improve the efficiency of the tax system:

• capital gains tax...