Extra health spending and a population that is ageing faster than previously expected will add to the burden of spending over the next 50 years, according to the Treasury’s independent forecaster.

The £20bn boost to the health budget by 2021-22 promised by Theresa May, coupled with falling immigration – which will cut the number of young and working-age people – will increase the public deficit unless the government moves to increase taxes or take other measures to reduce spending, the Office for Budget Responsibility (OBR) said.

In a sweeping assessment of the financial risks faced by the government over the next 50 years, the OBR warned that the health budget was likely to rise to 8% of GDP by 2024 from the current level of just over 7%, and to 13.8% by the mid-2060s as the population ages at a faster rate and technological advances and increasing ill health among older people burden the health service with extra costs.

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The OBR chairman, Robert Chote, said a new assessment of patient need based on analysis in the US showed the population’s increasing ill health from diabetes and other diseases would account for 1 percentage point of the rise to 13%. The triple lock on pensions and higher public sector pension costs would also add to the long-term bill.

Chote said a fresh assessment of the student loan system also showed the government was underestimating the costs of higher education over the next 40 years.

He said accounting rules used to assess the future liability on the public purse of student loans failed to take into account that repayments were linked to income and debts were written off after 30 years. These both reduced the level of liabilities and encouraged the Treasury to sell batches of loans at discount prices to the private sector.

Overall, the government’s total spending, excluding interest payments on the nation’s debt, will rise from 36.4% in 2022-23 to 44.6% by 2067-68 under current projections.



Last year the OBR said in its first fiscal risks report, which calculates the burden of public spending over the next 40 years, that the government would be unable to reach the target of a debt-to-GDP ratio of 40% without large tax rises or cuts to spending.

An estimate last year of the impact of Brexit found the costs of leaving the European Union would wipe out most, if not all, of the savings from the UK’s budget contributions. Chote said that without further clarity about the government’s exit strategy, he was unable to say if Brexit would be more or less harmful than his first estimate.

But he said that as a result of health spending commitments made by May last month that remained unfunded, the situation this year had worsened.

The government has promised to fund much of the rise in health spending from the Brexit dividend that comes from not contributing to the EU budget.

Last year the OBR said EU productivity levels would likely fall after Britain’s exit from the EU, leading to lower tax revenues and wiping out most or all of the dividend.

The Treasury said the government was committed to funding health spending “in a responsible way”.

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The chancellor, Philip Hammond, said: “We have made excellent progress reducing government borrowing by three-quarters and, as a result, our national debt is due to begin its first sustained fall in a generation.

“We can be proud of this achievement, but – as today’s reports clearly illustrate – we cannot be complacent. We must continue to deliver on our commitment to fix our public finances, and we must reject the arguments of those who think that debt can rise again without consequences.”