Kate Andrews

Before the pandemic hit, NHS England waiting lists were at a record high of 4.4 million. Three lockdowns later, they’ve risen to six million: an unacceptable figure for a Tory government that has spent years trying to rebrand itself as the ‘party of the NHS’. Boris Johnson’s decision to break his manifesto pledge and raise taxes was directly linked to the idea that the money would first be funnelled into the health service to fix the backlog. So can he now deliver for patients? When Health Secretary Sajid Javid announced his ‘elective recovery plan’ in the House of Commons on Tuesday, he said that the waiting list would start shrinking by March 2024, though he stressed that the numbers will rise before then. By how much?

In recent weeks alleged lockdown parties and suitcases full of wine have been the biggest threat to Boris Johnson’s premiership. But throughout the winter months, another threat has been brewing — one that could, in the longer term, determine the government’s fate. Britain’s cost of living crisis has been steadily worsening as price hikes for essential goods and services (food, transport) continue to outpace predictions. But the worst is still to come, with Ofgem’s announcement this morning that energy bills for the average household will be rising by nearly £700, as the energy price cap is lifted by 54 per cent come April.

Boris Johnson and Rishi Sunak’s plan to press on with the new health and social care levy is not a huge surprise. The deal between them last year to get social care reforms over the line boiled down to a simple principle: new spending projects must be fully funded. That remains as important to the Chancellor today as it was back then. With the Prime Minister still opposed to making cuts elsewhere to pay for his plans, the levy, by default, stays with us. As I wrote last week, it was highly unlikely that recent updates to public finance figures – showing lower borrowing and higher tax receipts than expected – would count towards Sunak’s definition of ‘fully funded.

After promising not to raise National Insurance in the 2019 manifesto, the Tories are preparing to do just that in April with their new ‘health and social care levy.’ The levy is set to add £200 to the average worker’s tax bill. Why have the Tories broken this manifesto promise? Because there was a pandemic, the government says. There was no choice. Tory MPs are getting antsy. Backbenchers, including former cabinet ministers David Davis and Robert Jenrick, are calling for the National Insurance rise to be postponed or scrapped, as relatively high inflation and the cost-of-living crisis is creating enough of a burden on taxpayers already, even before the new levy kicks in.

If Boris Johnson manages to cling on to his job, he’ll have much more than the parties of lockdowns past to worry about. Britain’s cost of living crisis is worsening still, with CPI inflation rising by 5.4 per cent in the 12 months leading up to December last year. This has, once again, outpaced consensus, surging even further past the Bank of England’s most recent official forecast. There’s little doubt left that heavy government spending is playing a significant role in the inflation we’re experiencing now Inflation is now at a 30-year high. And it’s still rising. Capital Economics now estimates a peak of 7 per cent around April, and there is once again increasing speculation that December’s interest rate rise to 0.

Nearly two years after the UK experienced its biggest economic collapse in 300 years, the economy has returned to pre-pandemic levels. GDP is estimated by the ONS to have grown by 0.9 per cent in November, almost twice what had been expected – making it 0.7 per cent larger than it was in February 2020. The US and Sweden managed to pass pre-pandemic levels last spring. China took just a few months. But Britain, whose economy fell further than almost any developed country in 2020, is catching up. Britain, whose economy fell further than almost any developed country in 2020, is catching up The below chart shows how UK growth is now at the top end of forecasts (shaded area) better than envisaged in any Budget since that of March 2020.

Forget the desirability (or lack thereof) of tax hikes: can Britain survive them? That’s the economic question that kicked off the new year in cabinet this week when Jacob Rees-Mogg was reported to have encouraged the Prime Minister and his colleagues to roll back plans to bring in the new National Insurance levy this April. A recap on the proposals: the 1.25 per cent National Insurance hike will be paid by both employers and employees, and will eventually be funnelled into social care, we're told. But for the first few years, most of the tax revenue it raises (roughly £12 billion) will go to addressing the NHS backlog and the millions of people on waiting lists.

After growing calls from retail and hospitality for financial support to weather the ‘unofficial lockdown’ plaguing these industries, the Treasury today has responded. After a week of conversations with business leaders, Chancellor Rishi Sunak has announced a £1 billion support package this afternoon, which includes one-off grants worth up to £6,000 for hospitality and leisure businesses in England, as well as government cover of Statutory Sick Pay for workers off with Covid-related illness, which can be claimed by small and medium-sized firms. Sunak’s decision to deliver a support scheme isn’t all that surprising, given the Chancellor's generous track record with these packages in the past.