Chancellor Philip Hammond will use Wednesday’s Budget to announce that rising tax revenues as a result of a stronger-than-expected economy will be used to build up a £60bn reserve to deal with Brexit-related uncertainty, rather than increase spending on the NHS.
Mr Hammond will announce an extra £1.3bn for social care, but Shadow Chancellor John McDonnell has warned that £12bn should be immediately redirected to the NHS, warning that “the crisis is happening now.”
Appearing on the BBC’s Andrew Marr Show yesterday, the Chancellor also warned that the UK would be prepared to “fight back” and “not slink off into the corner” if no trade deal with the EU could be reached, and would do “whatever it takes” to rebuild the British economy.
Mr Hammond said: “If there is anybody in the European Union who thinks that if we don’t do a deal with the European Union, if we don’t continue to work closely together, Britain will simply slink off as a wounded animal, that is not going to happen.
“British people have a great fighting spirit and we will fight back. We will forge new trade deals around the world. We will build our business globally.
“We will go on from strength to strength and we will do whatever we need to do to make the British economy competitive and to make sure that this country has a great and successful future.”
Mr Hammond warned that while the economy was performing better than expected, there was still a deficit. “If your bank increases your overdraft limit you don't want to go and spend every penny in it,” he said. “We’ve got enough gas in the tank to see us through that journey... that seems like a sensible approach.”
Mr Hammond also warned that problems in “under pressure” public services were not all about money, and that issues posed by an ageing population needed more complex solutions.
“There is a case for taking a longer term view to fund a service that is linked to the ageing demographic of the population,” he said.
In an article for The Sunday Times, Mr Hammond wrote: “As we begin our negotiations with the European Union we are embarking on a new chapter in our history.
“We need to maintain our commitment to fiscal discipline and to strengthen our economic position as we forge our vision of Britain’s future in the world.”
Meanwhile, shadow Chancellor John McDonnell told Andrew Marr: “The independent estimate now on [how much is needed for the] NHS and social care is between £8bn and £12bn.
“We believe that the Government now put aside, as is reported, £60bn – increased tax receipts have contributed to this as well – for a crisis in case of Brexit.
“The crisis is here now. We should prepare for Brexit but some of that money now needs to deal with the crisis in the NHS and social care.”