- Britain faces tough questions over rising levels of job inactivity and NI cuts
- Prime Minister Rishi Sunak has vowed to crack down on the UK’s growing health benefits bill.
- Full IMF delegation to conduct ‘Article 4’ inspection
Under pressure: Chancellor Jeremy Hunt
Britain will face tough questions over rising levels of job inactivity and cuts to national insurance contributions when inspectors from the International Monetary Fund (IMF) arrive next month.
This comes as concern grows over the number of people dismissed from work due to long-term illnesses, which has reached a record 2.8 million.
“One area we need to look at is the quality of health care and another is the way disability is reported,” said Helge Berger, the IMF’s senior official for Europe.
His comments came in the wake of Prime Minister Rishi Sunak’s pledge to crack down on the UK’s growing health benefits bill.
“Most of the growth momentum in the UK is coming from an expanding workforce due to migration,” Berger said over the past two years.
He suggested that with increasing numbers of Britons out of work, productivity was suffering and the whole area needed close scrutiny.
A full IMF delegation will spend up to two weeks in Britain on what is known as an “Article 4” inspection, meeting Chancellor Jeremy Hunt and the Treasury, the Office for Budget Responsibility and other officials and thinkers. tanks while doing their job. He could also be expected to meet with opposition leaders.
The Chancellor has sought to boost the effort to reduce economic activity by seeking stricter tests for determining entitlement to health benefits that are considerably more generous than unemployment benefits and universal credit.
It has also tried to speed up the return to the workforce.
But unemployment data for March showed that economic inactivity continues to rise despite nearly a million unfilled jobs.
A clash of views between the Government and the IMF looks certain after the Chancellor’s successive 2 per cent cuts to employees’ National Insurance contributions.
The IMF has made clear in Washington that the priority for Western democracies is to create ‘fiscal buffers’ (budget space to deal with future financial crises) following large increases in borrowing and debt as a result of the pandemic and the war against Ukraine . .
Berger said the IMF’s priority in London would be “fiscal consolidation,” the Fund’s favorite term for cutting spending and raising revenues.
“We believe this is appropriate given the track record,” the Fund official insisted. The IMF will particularly focus on “health care spending.”
Hunt announced measures in the March Budget to reduce health costs by transforming technology in the failing NHS and making use of advances in the use of artificial intelligence (AI).
The Fund suggested the most efficient way to address revenue shortfalls is to close loopholes, a policy favored by shadow chancellor Rachel Reeves. He also favors wealth taxes.
The Chancellor began the process of repairing the tax base in the budget.
Abolished non-domicile status for UK residents with overseas credentials.
Reeves has gone further to advocate for a tougher regime with fewer escape routes.
He is also in favor of clamping down on tax breaks for North Sea oil companies.