The tax and spending choices facing Andy Burnham

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Andy Burnham is preparing to enter Downing Street, but he will inherit a government facing tight fiscal constraints and a series of difficult decisions.

The public finances remain under pressure, debt interest spending is high, and commitments not to raise the main rates of income tax, National Insurance or VAT limit some of the most obvious ways of raising revenue. At the same time, the new Prime Minister will need to make choices about departmental spending, defence, welfare, social care and the cost of living.

How much flexibility will Burnham have over taxes, borrowing and public spending? Which commitments could be maintained, and which might need to be scaled back? And will a change of Prime Minister create space for a different economic strategy - or reveal the same underlying constraints?

Christine Farquharson is joined by IFS researchers Max Warner and Tom Waters to examine the economic choices facing the incoming Prime Minister.

Zooming in discussion questions:

These are a set of questions designed for A Level economics students to discuss, written by teacher Will Haines.

1. The OBR report outlines that, over the next 50 years, the UK’s public finances are projected to follow an unsustainable path. What is the most significant factor behind this forecast?
2. The government has committed to increasing defence spending to 3.5% of GDP. To what extent should this be funded through higher taxes, spending cuts, or increased borrowing? Discuss.
3. At the end of this episode, three landmark reviews are discussed: one on welfare, one on young people not in education, employment or training (NEET), and one on adult social care. Assess which of these issues is the most pressing for the government and identify two economic policies that could help address it.