(Bloomberg) -- Prime Minister Rishi Sunak said he cannot raise UK taxes to fund pay rises for workers in the state-run National Health Service.
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"Where we are with taxes at the moment, we can't put them up," Sunak told an audience of health-care workers in northeastern England, adding that government spending on the NHS is at a historical high. "The pie is as big as it's ever been" and the balance to strike is "about what's affordable within that pie."
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Sunak is grappling with how to bring to an end a series of damaging strikes by NHS workers, while at the same time shielding Britons from the biggest squeeze on the cost of living in decades and keeping a firm grip on the nation's finances. Nurses and ambulance workers are due to stand side-by-side on picket lines for the first time on Feb. 6, in an escalation of their campaign against below-inflation raises, but so far the Treasury has held steady in its refusal to revise pay offers.
The premier is trying get his administration back on track with a plan to overhaul the crisis-hit NHS, after on Sunday dramatically firing Conservative Party Chairman Nadhim Zahawi over his tax affairs following weeks of damaging headlines over the minister's tax affairs.
On Monday, he sought to distance himself from decisions made by his predecessors Liz Truss and Boris Johnson over handling of sleaze - a catch-all term in Britain for scandals ranging from sexual transgressions to financial wrongdoing - in the ruling Conservative Party.
"The things that happened before I was prime minister, I can't do anything about," Sunak said. "When it came to Nadhim Zahawi, I asked the independent adviser to look at it straight away, acted on his findings straight away. That should give you some confidence that these things matter to me, and that I will take whatever steps are necessary to restore the integrity back into politics."
Zahawi had acknowledged being "careless" with the handling of tax payments relating to the sale of shares in the YouGov polling company he co-founded. He also incurred a tax penalty for not paying the right amount at the correct time, and at the weekend, a review into the matter concluded he'd broken the ministerial code, leading to Sunak's decision to fire him.
Sunak was told there were no outstanding issues regarding Zahawi's tax affairs when he appointed him to his cabinet in October, his spokesman, Max Blain, told reporters on Monday. The prime minister only became aware Zahawi had paid a penalty on Jan. 14, when the then-Tory chairman issued a statement, he said.
Trailing Labour badly in the polls, Sunak is now trying to change the focus back onto his five stated priorities for the year of restoring the economy to growth, cutting debt, halving inflation, stopping migrants from crossing the English Channel in small boats and cutting NHS waiting lists. He and Chancellor of the Exchequer Jeremy Hunt have repeatedly said that if they're over-generous in public sector pay settlements, it's likely to stoke inflation and endanger their economic targets.
"Nothing would give me more pleasure than to wave a magic wand and have you paid lots more," Sunak told an audience of health care workers as he set out the government's latest plan to bring down waiting times for ambulances and at hospital emergency departments.
The £1 billion ($1.2 billion) blueprint promises 800 new ambulances - including 100 specialist mental health vehicles - 5,000 more hospital beds, and longer hours for urgent care centers.
Another constraint on Sunak's ability to pay nurses and doctors more is that he and Hunt have already put the UK on track to its highest tax burden since World War II, angering a swath of right wing Conservatives and damaging the Tory reputation as being the party of low taxes. That gives him little scope to raise further levies at the budget on March 15 - although Hunt suggested last week that tax cuts aren't likely either.
--With assistance from Emily Ashton.
(Adds comment from Sunak's spokesman in eighth paragraph)
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