About Be the Chancellor

• The revenue and spending numbers in the tool refer to 2029–30 (the year to which the current government’s fiscal rules apply, and what we assume to be the final year of the parliament) and are expressed in cash terms.
• The tool’s starting point – the baseline – is designed to reflect the forecasts, plans and policies that would be inherited by a Chancellor taking office today. For the key fiscal aggregates (such as the forecast level of borrowing) and macroeconomic variables (such as the forecast rate of economic growth), we take the Office for Budget Responsibility (OBR)’s forecasts from the March 2025 Economic and Fiscal Outlook (EFO).
• The tool is not designed to model the effects of policies on economic growth or interest rates (though in some cases the revenue effects of tax changes do allow for some kinds of behavioural responses). But the user can adjust forecasts for these variables as desired – if, for example, they are confident that their policies would deliver faster economic growth and higher interest rates. The rate of inflation is taken as given.
• By default, we assume that tax/benefit rates and thresholds evolve as assumed in official public finance forecasts; any changes the user makes are relative to that baseline. For simplicity, and to present the user with figures they are more likely to be familiar with, we show changes as being made to 2025–26 rates and thresholds (but show budgetary effects in 2029–30). In calculating the path of spending, borrowing and debt, we assume that the budgetary effects ramp up evenly across the rest of the parliament. In calculating the budgetary effects of tax and benefit changes, we allow for some non-linear effects (i.e. the fact that changing a tax/benefit rate or threshold by twice as much may not have twice the budgetary impact), interactions between policy options, and knock-on effects on other tax liabilities and benefit entitlements.
• Real-terms growth rates in funding for different departments are expressed relative to the 2025–26 plans published in the March 2025 Spring Statement. Real-terms growth is calculated relative to economy-wide inflation, as measured by the GDP deflator, using March 2024 forecasts from the OBR. Default growth rates are calculated to be broadly consistent with existing spending plans and stated government policy.
• Some tax and spending policies are devolved. Some of the choices available to the user in the tool will apply only to the portions of the UK where such decisions are made by the Chancellor. Where appropriate, in such cases we adjust for the impact on funding levels for the devolved governments of Scotland, Wales and Northern Ireland.
• The choices and options in the tool are not intended to be exhaustive. If users would like to add a tax or spending policy that we have not included, there is an ‘Add your own policy’ box in both the tax and spending sections.
• The tool is intended to illustrate some key issues, challenges and trade-offs, not to represent a complete and 100% accurate model of the UK economy or public finances. Results should always be interpreted and shared with that caveat in mind. 

The bar in the top section of the tool displays the government’s current budget balance in in 2029–30, in cash terms. This is the level of government borrowing excluding spending on net (capital) investment, where a positive number denotes a budget surplus and a negative number denotes a budget deficit. This is the measure of borrowing used in the current government’s ‘stability rule’, which at the time of writing is the most binding of the government’s fiscal targets. 

The baseline (the plans the user starts with) is a current budget surplus of £10 billion in 2029–30. This is estimated based on the forecasts contained in the OBR’s March 2025 EFO. The baseline for overall borrowing is a budget deficit of £74 billion in 2029–30 (the difference between the two being accounted for by £84 billion of planned net investment in 2029–30 in baseline plans).  

Within the tool, the government’s overall budget position is calculated as total revenue minus total spending, plus an adjustment to account for changes to the assumed rate of economic growth (the latter is discussed under ‘Guide to economic assumptions’ below). The current budget balance is then calculated by subtracting the amount of planned net investment spending. The path for these two measures of borrowing can be seen within the ‘Impact of your choices’ section of the tool. 

The tool accounts for the additional debt interest costs associated with higher levels of borrowing (assuming that the additional borrowing ramps up gradually) and those associated with any user changes to the interest rate assumption. These are reflected in the total spending figure and in the summary at the top of the ‘Adjust spending’ section. 

The current government has a commitment to have debt, defined as public sector net financial liabilities (PSNFL) falling as a share of national income between 2028–29 and 2029–30 (or, specifically, to have debt in March 2030 as a share of March-centred GDP in 2029–30 lower than debt in March 2029 as a share of March-centred GDP in 2028–29). When 2029–30 becomes the third year of the forecast, this will then become a rolling three-year target.  

In the tool, the baseline is the OBR’s March 2025 forecast, under which PSNFL is set to fall from 83.2% of (March-centred) GDP in 2028–29 to 82.7% 2029–30 (equivalent to around £15 billion). 

From this baseline, for a given level of user-determined borrowing, and based on the specific user assumptions about interest rates and economic growth (see ‘Guide to economic assumptions’ below) , we model the path for PSNFL over the rest of the parliament. These estimates and forecasts are inherently uncertain. In addition, to make the tool tractable, we need to make a range of assumptions about the time profile of any changes to tax and spending. Specifically, we assume that policy changes ‘ramp up’ over the remaining four years of the parliament (with one-quarter in place in year 1, one-half in year 2, three-quarters in year 3, and so on). Combined, this allows us to estimate the impact of the user’s choices on the path for debt. 

This is not an exact science, and we wish to avoid and discourage spurious precision: from the perspective of fiscal sustainability, whether debt is forecast to be rising by 0.1% of GDP or falling by 0.1% of GDP in five years’ time is immaterial. For the purposes of the tool, we define ‘falling debt’ to mean that PSNFL is falling by at least 0.5% of (March-centred) GDP between 2028–29 and 2029–30. ‘Stable debt’ is defined to mean that the change in PSNFL between 2028–29 and 2029–30 is between –0.5% and +0.5% of GDP. ‘Rising debt’ is defined as PSNFL rising by more than 0.5% of GDP in 2029–30. A message underneath the bar showing the 2029–30 budget position (at the top of the tool) gives this information. In the baseline forecast, the year-on-year reduction between 2028–29 and 2029–30 rounds to 0.4% of GDP, and for this reason the starting message is that ‘debt is stable’. 

Economic growth 

The tool does not directly model the effect of policy choices on economic growth. This is not to suggest that none of the combinations of policy choices users can make in the tool would affect growth. Instead, we allow users to change the assumed rate of economic growth. This could reflect a user’s judgement about the likely economic impacts of their policy choices, or could just be used to illustrate the impact that a more optimistic/pessimistic growth forecast would have. We allow for adjustments to the rate of growth in real GDP; we treat economy-wide inflation – as measured by the GDP deflator – as a given, and so this feeds one-for-one into the forecast for nominal GDP. 

The default rate of real economic growth of 1.8% per year is taken from the OBR’s March 2025 forecast (the average rate of growth in real GDP between 2025–26 and 2029–30). This is roughly halfway between the average rate of 1.2% per year over the period since the 2008 financial crisis (2008–09 to 2024–25) and the average of 2.3% per year over the 30 years prior to the financial crisis (1979–80 to 2008–09).

User adjustments are assumed to apply to all years. This could, in theory, reflect a combination of both demand- and supply-side impacts. If, however, one uses the OBR’s assumed fiscal multipliers, impacts on aggregate demand from changes to tax and spending are assumed to fall away to zero by the fifth year of the forecast (in the case of the March 2025 forecast, 2029–30). On that basis, because an adjustment to the growth rate is assumed to persist and apply right through to 2029–30, it is best thought of as coming from a change in the productive capacity (supply side) of the economy rather than a demand boost. 

Higher rates of economic growth can be expected to improve the public finances. A faster-growing economy would be expected, for example, to bring in additional tax receipts and to reduce spending on universal credit. Higher growth might also add to spending pressure: the UK is committed to spending a certain percentage of GDP on defence and overseas aid, for example, and faster economy-wide wage growth might add to demands for higher pay awards in the public sector. The degree to which growth would be expected to improve the public finances would depend both on the composition of growth (i.e. in which sectors of the economy growth is concentrated, given that the government taxes some economic activities and actors more heavily than others) and on the policy response. For simplicity and transparency, we assume that an additional £100 of GDP reduces public sector net borrowing by £40. We refer to this as ‘growth effects’ in the tool and make no judgement about whether this would come via higher revenues and/or lower spending (hence treating it as a separate item). 

Interest rates 

The tool does not model interest rates and how they might change with different levels of borrowing and debt or with different combinations of tax and spending policies. We do allow users to adjust the interest rate assumption and model the impact of this on debt interest spending. We do not model the impact on the Bank of England’s balance sheet. 

To do this, we take as our starting point the OBR’s March 2025 forecast. All changes are relative to that forecast, which was based on average market expectations for the evolution of interest rates over the weeks preceding the March 2025 Spring Statement, and make use of the debt interest ready reckoner published alongside. We assume that when the user makes a percentage point change to interest rates in the tool, this represents a percentage point change in both gilt rates and short rates in 2025–26 that persists for the entire period to 2029–30. We adjust these estimates for the change in interest receipts that would result from a change in interest rates, using the OBR’s March 2024 ready reckoner spreadsheet. A 1 percentage point increase (reduction) in interest rates in the tool is assumed to increase (reduce) net debt interest spending by £13.8 billion. This is reflected in total spending within the tool. 

Note that we do not model the impact of a change in interest rates on broader economic conditions, tax revenues, or spending on things other than debt interest.

Within the ‘Adjust public service spending’ section, users are able to change plans for how much will be spent on a range of public services. This is done at the department level in order to mirror the way in which spending is planned and controlled by the UK government, and to more closely resemble the Spending Review process.

Users can choose the annual real-terms growth rate in each (major) department’s resource, or day-to-day, budget. This refers to the department’s Resource Departmental Expenditure Limit, excluding depreciation. These annual growth rates apply to the 2025–26 plans for each department published in the March 2025 Spring Statement, for the four years up to 2029–30. They are real growth rates – over and above the rate of economy-wide inflation (as measured by the GDP deflator), the forecast for which is taken from the OBR’s March 2025 forecast and treated as fixed. Moving the sliders left and right changes the percentage growth rate in each department’s resource budget; the tool calculates the spending implications automatically. 

For simplicity and to reduce the number of parameters within the tool, we allow users to adjust only the overall level of capital (investment) spending but not its allocation between departments. We instead impose that each department’s capital budget (Capital Departmental Expenditure Limit) is scaled up or down in line with the overall level of public sector gross investment, with each department receiving the same portion of the total as in 2025–26. In reality, the government would be free to allocate more to, say, the Department for Transport and less to the Department for Education, or vice versa. 

Many departmental budgets that the user can determine only provide for spending on services in England, because responsibility for those services is devolved: the Department for Education is only responsible for education services in England, and not in Scotland, Wales or Northern Ireland, for example. The tool automatically adjusts for the approximate Barnett consequentials of user spending choices. These are the changes in the payments (block grants) made to the devolved governments of Scotland, Wales and Northern Ireland as a result of changes to spending in England, determined by the Barnett formula. These calculations are based on the comparability factors, uplift factors and population estimates published in the October 2024 HM Treasury Statement of Funding Policy. The comparability factor for the spending grouped into ‘other departments’ is calculated as the weighted average of the departments in question, with the weights derived from each department’s share of 2025–26 departmental expenditure limits. 

The default growth rates for departments’ resource budgets are not intended to be prescriptive; rather, they are chosen to represent our interpretation of what a continuation of current government policy might entail. Detailed spending plans do not exist beyond 2025–26: all we know is that overall resource spending is planned to grow at an average real-terms rate of 1.2% per year. We make the following set of assumptions. NHS England funding is assumed to grow by 3.6% per year in real terms, in line with our central estimate of what it would take to implement the NHS workforce plan. Schools spending is assumed to remain flat in real terms. The childcare reforms announced in March 2023 are assumed to be fully funded, based on the OBR’s estimate of the eventual cost. The Defence and Single Intelligence Account resource budgets are assumed to grow by 1.0% per year, the rate implied by the details of the spending uplift confirmed in the March 2025 Spring Statement (with much faster implied increases in defence capital spending).  After accounting for the Barnett consequentials of these spending changes, this implies real-terms cuts of 2.1% per year to all other ‘unprotected’ departments and budgets (including the non-NHS elements of the Department of Health and Social Care, and the non-schools, non-childcare elements of the Department for Education). Alternative assumptions would result in different default values. In any case, users do not have to stick to these defaults and can change the growth rates as they see fit. The default growth rate for overall capital investment comes from the government’s stated plans for public sector gross investment, which imply a real-terms freeze between 2025–26 and 2029–30 (hence the default real-terms growth rate of 0.0%).

Next to each slider is an information icon; clicking this will provide some additional information and context that users may find helpful. 

The tool allows users to make changes to nine of the main social security (i.e. state pension and other benefit) policies. The default parameters shown are current (2025–26) UK policy. Next to each option is an information icon; clicking this will provide some additional information about the specific option. Users can also use the ‘Add your own spending policy’ section to add the budgetary effect of any other policy (more details below).

Cost/yield estimates 

The tool shows the overall effect of social security policy changes on government spending in 2029–30. By default, we assume that benefit rates and thresholds evolve (e.g. are frozen or increased in line with inflation) in the ways assumed in the latest official public finance forecasts; any changes the user makes are relative to (e.g. in addition to) that baseline. For example, official spending forecasts assume that the state pension is subject to the ‘triple lock’ (increasing each year by the greatest of inflation, growth in average earnings and 2.5%); changes made by the user are on top of the change implied by the triple lock. For simplicity, we present changes as being made to 2025–26 policy rates and thresholds. The tool shows the effect of a policy change on spending in 2029–30 (in cash terms). For calculating the path of borrowing and therefore debt, we assume that the budgetary effects of policy changes ‘ramp up’ over the remaining four years of the parliament (with a quarter in place in year 1, half in year 2, and so on). The exact year in which a social security policy change is made will make no difference to the system in place (and therefore the level of government borrowing) in 2029–30: for example, increasing a benefit by 10% and then uprating it in line with inflation for four years will leave it at the same final level as uprating it with inflation for four years and then increasing it by 10%. But the point at which a policy is introduced will affect the cumulative stock of government debt built up in the years before 2029–30, and assuming changes take effect at an even pace across the parliament seems the most neutral approach.

The budgetary effects of most of the social security policy options are estimated for 2025–26 using IFS’s in-house tax and benefit microsimulation model, TAXBEN, run on uprated data from the 2022–23 Family Resources Survey and assuming full take-up of entitlements. We also use data/forecasts from the Department for Work and Pensions’ benefit expenditure and caseload tables and its Stat-Xplore tool. The effect of changing the rate of child benefit is derived from the estimate for 2027–28, the latest year shown, in the most recent (January 2025) HMRC ‘Ready Reckoner’ (HMRC, 2025a). All of the underlying estimates are for earlier years than 2029–30; we take estimates for the latest year available and uprate them to 2029–30 in line with nominal GDP as forecast by the OBR. 

Some policies, such as universal credit and the two-child limit, are being phased in gradually with transitional protections for existing recipients. We model the long-run impacts of changing these policies, in effect assuming they are fully in place in the baseline; by 2029–30, this is due to be mostly the case anyway.

In calculating the overall revenue effect of making more than one policy change, we account for the most important interactions between different changes. That is, we adjust the overall revenue figure to account for the fact that changing one policy can affect the amount of revenue that can be raised from another policy. For example, abolishing the two-child limit will be less expensive if the child element of universal credit (UC) is less generous; abolishing the high-income child benefit charge will be more expensive if child benefit is more generous. Changing the withdrawal rate of UC changes the budgetary impact of several other social security policies. We also allow for the non-linear impact of changing the UC withdrawal rate: the cost of reducing it from 55% to 45% is greater than the saving from increasing it from 55% to 65%. Costings should be taken as approximations: there is considerable uncertainty around the effects of some of these policies, and the modelling is simplified for tractability; the costings provide a rough sense of scale, but would not necessarily represent our best estimate of the impact of any particular combination of policies. 

When a policy change is made, the cost/yield shown may not only relate to spending on the benefit that was changed. It can incorporate knock-on effects on entitlement to other benefits or liability to taxes: for example, an increase in the state pension will increase pensioners’ income tax liabilities and reduce their entitlement to means-tested benefits. Some social security policies are devolved to Scotland, and all are devolved to Northern Ireland; in such cases, the changes shown are to benefit rates set by the UK government but the effect on spending incorporates the knock-on effect of Westminster decisions on grant funding for devolved administrations, which is roughly (in some cases very roughly) equivalent to allowing for the cost (or yield) of devolved administrations’ mirroring the reforms.

The tool is not designed to model the effects of reforms on economic growth and does not take account of any possible behavioural responses to social security reform. If a user thinks that the combination of policies they have chosen would boost or depress the productive capacity (supply side) of the economy, they can adjust the assumed rate of economic growth (details under ‘Guide to economic assumptions’ above).

The tool allows users to make changes to 28 tax policies. The default parameters shown are current UK policy. Tax rates and thresholds are shown for 2025–26. Users can also use the ‘Add your own tax policy’ section to add the revenue effect of any other policy (more details below).

Revenue estimates 

The tool shows the overall effect of tax policy changes on tax revenue in 2029–30. By default, we assume that tax rates and thresholds evolve (e.g. are frozen or increased in line with inflation) in the ways assumed in the latest official public finance forecasts; any changes the user makes are relative to (e.g. in addition to) that baseline. For example, official revenue forecasts assume that council tax increases at a certain rate each year; changes made by the user are relative to that baseline. For simplicity, for all policy options other than those that relate to freezing or unfreezing rates/thresholds over multiple years, we present changes as being made to 2025–26 tax rates and thresholds. The tool shows the effect of a policy change on revenue in 2029–30 (in cash terms). For calculating the path of borrowing and therefore debt, we assume that the revenue effects of tax policy changes ‘ramp up’ over the remaining four years of the parliament (with a quarter in place in year 1, half in year 2, and so on). The exact year in which a tax policy change is made will make no difference to the tax system in place (and therefore little difference to the level of government borrowing) in 2029–30: for example, increasing a threshold by 10% and then uprating it in line with inflation for four years will leave it at the same final level as uprating it with inflation for four years and then increasing it by 10%. But the point at which a policy is introduced will affect the cumulative stock of government debt built up in the years before 2029–30, and assuming changes take effect at an even pace across the parliament seems the most neutral approach.

In many cases, our starting point for the estimated revenue effect of a given tax policy change is the latest year shown (2027–28) in the most recent (January 2025) HMRC ‘Ready Reckoner’ (HMRC, 2025a). In other cases, estimates are derived from other statistics/estimates/forecasts published by HMRC (2025b), the Office for Budget Responsibility (2025) or the Department for Levelling Up, Housing and Communities (2025). These official estimates are often combined or adjusted to match the particular policy changes included in the tool. There are some policy changes for which there are no official estimates of the revenue effect, where we choose to use an alternative source, or where we use other data to adjust official estimates. For employer National Insurance contributions (NICs) and for levying NICs on private pension income and pensioners’ earnings, we make use of IFS’s in-house tax and benefit microsimulation model, TAXBEN, run on uprated data from the 2022–23 Family Resources Survey. For the VAT exemption (and business rates relief) of private schools, we combine an estimate of the revenue impact from the October 2024 Budget with estimates of the effect on the number of pupils being educated in the state sector from OBR (2024) and the cost of educating each additional state school pupil from Sibieta (2023). For capital gains tax at death, we adjust estimates from Advani and Sturrock (2023) to account for changes in CGT rates, and we thank David Sturrock for providing revenue estimates for changing the inheritance tax threshold from an updated version of the model underlying the analysis in that chapter. In most cases, estimates for 2029–30 are not available; we uprate the revenue estimate for the latest year available to 2029–30 in line with nominal GDP as forecast by the OBR.

In calculating the overall revenue effect of making more than one policy change, we account for the most important interactions between different changes to the same tax. That is, we adjust the overall revenue figure to account for the fact that changing one policy can affect the amount of revenue that can be raised from another policy. To give a simple example: if a user increases the income tax higher-rate threshold, less income will fall into the higher-rate tax band (and more into the basic-rate band) and so less revenue will be raised by increasing the higher rate of income tax (and more by increasing the basic rate) than without the threshold change. We also model the most important non-linearities in revenue effects (e.g. the fact that increasing the additional rate of income tax from 45% to 46% would raise more than increasing the rate from 49% to 50%). To make the tool tractable, we make some simplifying assumptions and do not model all possible interactions and non-linearities. Revenue estimates should be taken as approximations: there is considerable uncertainty around the effects of many of these policies, and the modelling is simplified for tractability; the estimates provide a rough sense of scale, but would not necessarily represent our best estimate of the impact of any particular combination of policies. The tool will be most accurate for smaller changes.

When a policy change is made, the cost/yield shown may not only relate to revenue from the changed tax. It can incorporate knock-on effects on liability to other taxes or entitlement to social security benefits: for example, an increase in income tax will reduce people’s after-tax incomes and therefore increase their entitlement to means-tested benefits. We assume that employer NICs changes are fully passed through to the worker whose earnings are being taxed and we account for the consequences for their income tax, employee NICs and means-tested benefit entitlements. In some cases, there can be knock-ons to other parts of government spending. The revenue effect of reinstating the VAT exemption of private school fees incorporates an estimate of the saving from educating fewer pupils in the state sector. In the case of devolved or partially devolved taxes (income tax, council tax, stamp duty land tax and business rates), the revenue effect incorporates the effect of Westminster decisions on funding for devolved administrations through the Barnett formula or ‘block grant adjustments’, which is roughly (in some cases very roughly) equivalent to allowing for the cost (or yield) of devolved administrations’ mirroring the reforms.

The tool is not designed to model the effects of reforms on economic growth. If a user thinks that the combination of policies they have chosen would boost or depress the productive capacity (supply side) of the economy, they can adjust the assumed rate of economic growth (details under ‘Guide to economic assumptions’ above). Some of the sources underlying our estimates do allow for some kinds of behavioural responses to policy changes but not others. The HMRC Ready Reckoner, for example, typically (though not consistently) incorporates ‘the direct impact of a measure on the tax base to which it is being applied, or to closely related tax bases [but not] effects on other tax bases and wider economic factors, such as inflation and investment’. Most of the other data sources give purely ‘mechanical’ estimates, without allowing for any effects of the policy on behaviour.

Users are referred to the underlying data sources for details of methodology, assumptions and caveats.

Notes on specific tax policies 

Next to each policy option within the tool is an information icon; clicking this will provide information about the specific option. 

Thresholds in the NICs system are currently aligned with income tax thresholds: in annual terms, the NICs primary threshold and lower profits limit (the points at which employee and self-employed NICs respectively become payable) are set equal to the income tax personal allowance (the point at which income tax becomes payable), while the NICs upper earnings limit and upper profits limit (the points above which the upper rather than main rates of NICs become payable for employees and the self-employed respectively) are aligned with the income tax higher-rate threshold (the point at which the higher rate of income tax becomes payable). For brevity, we use the names of the income tax thresholds throughout and use the annual values of the thresholds (though in reality employee NICs are calculated separately for each pay period – typically a week or a month – with the thresholds for each pay period depending on its length on a pro rata basis). Where these thresholds are changed in the tool, we assume that the income tax and NICs thresholds move in tandem and remain aligned.

Note also that changes to the personal allowance are treated as having no automatic effect on the higher-rate threshold, the income level at which higher-rate tax becomes payable (contrary to the standard convention – used in HMRC’s Ready Reckoner, for example – of assuming that the width of the basic-rate band is unchanged and the higher-rate threshold thus automatically changes pound-for-pound with the personal allowance). Users can adjust the higher-rate threshold separately to achieve their desired outcome.

The tool allows users to change departmental spending very flexibly. It also allows dozens of options for changing social security and tax policies. But this set of options is of course not exhaustive. In reality, any government would have lots more policy options it could choose from.

To reflect this, the tool has ‘Add your own policy’ sections for both spending and tax. These allow users to add the budgetary effect of any policy or set of policies. In the spending section, a positive (negative) number entered into the box represents higher (lower) spending and therefore higher (lower) borrowing, all else equal. In the tax section, a positive (negative) number entered into the box represents higher (lower) revenue and therefore lower (higher) borrowing, all else equal.

The number entered into the box is expressed in £ billion (i.e. entering 10 would represent £10 billion). 

Advani, A. and Sturrock, D., 2023. Reforming inheritance tax. Chapter 7 of The IFS Green Budget 2023. https://ifs.org.uk/publications/reforming-inheritance-tax.

Department for Work and Pensions. Benefit expenditure and caseload tables. https://www.gov.uk/government/collections/benefit-expenditure-tables.

Department for Work and Pensions. Stat-Xplore tool. https://stat-xplore.dwp.gov.uk/.

HMRC, 2025a (Ready Reckoner). Direct effects of illustrative tax changes. https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes.

HMRC, 2025b. Tax relief statistics. https://www.gov.uk/government/collections/tax-relief-statistics.

HM Treasury. Autumn Budget 2024. https://www.gov.uk/government/publications/autumn-budget-2024.

HM Treasury. Public Expenditure Statistical Analyses 2024. https://www.gov.uk/government/statistics/public-expenditure-statistical-analyses-2024.

HM Treasury. Spring Statement 2025. https://www.gov.uk/government/topical-events/spring-statement-2025

HM Treasury. Statement of Funding Policy October 2024. https://assets.publishing.service.gov.uk/media/6721134c3ce5634f5f6ef441/Statement_of_Funding_Policy_addendum.pdf

Ministry of Housing, Communities and Local Government, 2024. Council tax levels set by local authorities in England 2024 to 2025. https://www.gov.uk/government/statistics/council-tax-levels-set-by-local-authorities-in-england-2025-to-2026/council-tax-levels-set-by-local-authorities-in-england-2025-to-2026.

Office for Budget Responsibility. The OBR Ready Reckoner March 2024. https://articles.obr.uk/the-obr-ready-reckoner/index.html.

Office for Budget Responsibility. Economic and Fiscal Outlook October 2024. https://obr.uk/efo/economic-and-fiscal-outlook-october-2024/

Office for Budget Responsibility. Economic and Fiscal Outlook March 2025. https://obr.uk/efo/economic-and-fiscal-outlook-march-2025/

Office for Budget Responsibility. Fiscal Risks and Sustainability Report July 2023. https://obr.uk/frs/fiscal-risks-and-sustainability-july-2023/.

Sibieta, L., 2023. Tax, private school fees and state school spending. IFS Report R263, https://ifs.org.uk/publications/tax-private-school-fees-and-state-school-spending.

Data

Department for Work and Pensions, NatCen Social Research. (2021). Family Resources Survey. [data series]. 4th Release. UK Data Service. SN: 200017, DOI: http://doi.org/10.5255/UKDA-Series-200017.

If you have a question that is not listed below, you can contact us directly using the contact details in the About ‘Be the Chancellor’ section above. 

Why is the tool based on 2029–30? 

The current government is committed to achieving current budget balance in 2029–30, and to having debt (defined as public sector net financial liabilities) falling as a share of national income between 2028–29 and 2029–30, meaning that 2029–30 is the key year in the fiscal forecast. We also expect it to be the final year of the parliament, and the tool is intended to capture the choices and constraints facing a Chancellor who took office today and wished to set out their plans for the rest of the parliament.

Why don’t the figures in the tool match others I’ve seen elsewhere?

The tool draws heavily on data from the Office for Budget Responsibility (OBR), HM Treasury and HM Revenue and Customs, but the numbers do not – in most cases – come directly from these sources and so we would not expect them to match exactly. Some of the most likely reasons for a discrepancy between figures in the tool and figures in official sources or other IFS publications are:

• For the reasons described above, the focus of this tool is 2029–30. Many official estimates (e.g. in the HMRC Ready Reckoner) are for earlier years and need to be adjusted accordingly.
• Values are expressed (for 2029–30) in cash terms. In other contexts, including other IFS work, it is more appropriate to express values in today’s terms or as a percentage of national income.
• We have modelled interactions between some policy options (such that choosing policy A can affect the budgetary impact of choosing policy B) and some non-linear effects (such that changing a tax/benefit rate or threshold by twice as much may not have twice the budgetary impact). Others might not have allowed for these or might have incorporated them in a different way.
• We have made simplifying assumptions to make the model tractable. In other IFS analysis, where we are looking at a particular social security or tax policy (or policy combination), we may create and publish more precise estimates of budgetary effects. 

How can I put numbers for 2029–30 into today’s terms?

The revenue and spending numbers in the tool refer to 2029–30. In general, there are various ways to express future (e.g. 2029–30) cash numbers in today’s terms. For example, they could be put into today’s prices (i.e. deflated in line with expected price inflation) or expressed as an equivalent relative to the size of today’s economy. Different approaches will be appropriate for different purposes. 

As a rough rule of thumb, cash-terms figures for 2029–30 can be converted into 2025–26 prices (based on the GDP deflator as the measure of inflation) by dividing by 1.077 (e.g. a 2029–30 value of £100 billion would be equivalent to around £92.9 billion in 2025–26 prices).

How does the tool treat fiscal rules?

The main bar at the top of the tool shows the current budget balance – the amount of borrowing for day-to-day spending – in 2029–30. The current government’s fiscal mandate requires this to be in surplus (to display a positive number) in 2029–30; the starting value of £10 billion reflects the margin by which this was being met under March 2025 forecasts. To continue to meet this rule, the user needs to keep the value at £0 or above. 

The government also has a target for public sector net financial liabilities – a measure of government debt – to be falling between 2028–29 and 2029–30. Underneath the bar at the top of the tool showing the current budget position, there is a message informing the user whether debt is forecast to be falling, stable or rising between 2028–29 and 2029–30. This corresponds to whether the user is, or is not, meeting this supplementary fiscal rule. For more details of how this is calculated, see ‘Guide to government debt’ above.

How does the tool treat inflation?

To make the tool tractable, we take the rate of inflation as given. We use the OBR’s March 2025 forecasts for the GDP deflator to measure economy-wide inflation. Because inflation is treated as fixed, any adjustments to the economic growth assumption feed one-for-one into the rate of real economic growth. 

How do I interpret the big number at the top of the tool?

This refers to the government’s current budget balance in 2029–30: the level of borrowing excluding that for spending on net investment. A negative number means that the government is running a current budget deficit (with day-to-day spending exceeding revenue). A positive number means that the government is running a current budget surplus (with revenue exceeding day-to-day spending).

What does public service spending refer to?

The tool allows users to ‘adjust public service spending’. Broadly, this refers to two components of public spending: the day-to-day spending of departments and capital investment. 

Specifically, day-to-day departmental spending refers to Resource Departmental Expenditure Limits, or RDEL, excluding depreciation. There are sliders for departments that correspond to that department’s RDEL. The impacts of user changes to these sliders are shown in the ‘day-to-day’ bars of the summary chart under ‘Public spending summary’. 

‘Overall capital investment’, which is represented in a single slider, refers to public sector gross investment, or PSGI. This in turn includes Capital Departmental Expenditure Limits, or CDEL, which is capital funding that is allocated to specific departments, as well as other items of capital spending (e.g. locally financed capital spending by devolved and local governments, capital spending by public corporations (such as Transport for London), and the portion of student loans that is not expected to be repaid). The slider for ‘overall capital investment’ refers to all PSGI. The impact of user changes to this slider is shown in two places in the ‘Public spending summary’: the overall change is shown in the ‘public investment’ bar of the summary chart; and the change in CDEL for each department is shown in the ‘capital’ bars of the summary chart, under the assumption that each department’s CDEL is scaled up and down in line with the user’s selected growth rate for PSGI.

How does the tool treat devolved governments?

The tool is designed to capture the choices facing a hypothetical Chancellor of the Exchequer and Westminster government. Some responsibilities (e.g. for education and local government) and some tax and social security policies are devolved to the administrations of Scotland, Wales and Northern Ireland, and are therefore not under the direct control of the Westminster government for all of the nations of the UK. The level of spending in England does, however, affect the amount that is sent to the devolved governments via the Barnett formula. The spending section of the tool automatically adjusts for the impacts of a user’s spending choices on the block grants paid to the devolved governments of Scotland, Wales and Northern Ireland (for more detail, see ‘Guide to public service spending’ above). In other words, the tool automatically handles the implications of changes in English spending for the amount of funding available to the devolved administrations. Similarly, the tool incorporates the effects of Westminster government changes to tax and social security policies applying only in some parts of the UK on the block grants paid to devolved administrations in the rest of the UK; however, for reasons of tractability, these effects are incorporated within the budgetary impacts of the relevant tax or social security policies, not reflected in the ‘block grants’ element of the public spending summary. The figures in the tool should therefore accurately reflect the effects of all policy changes on the UK government’s budget position but should not be treated as a completely accurate picture of what the funding position of the devolved governments would be under different policy stances.

I’ve only made changes to taxes and/or economic assumptions – why has my public spending figure changed?

The public spending total accounts for the impact on debt interest costs of lower/higher borrowing. So if you have cut taxes, you will need to borrow more over the four-year period, and that additional borrowing will incur interest costs, which will add to the government’s debt interest spending. Or if you have increased the assumption for economic growth, the level of borrowing across the period will be reduced, leading to a reduction in the debt interest bill. This is why the public spending number in the tool can change even without any explicit changes to spending policies.