When a government plans to pass a law, it often publishes a green paper. This is an opportunity to share its thinking and provoke discussion.
The Finance Bill is a law Parliament passes to renew taxes, propose new taxes, and maintain the administration of the tax system. It enacts proposals announced in the Budget, which the Chancellor writes in secret. There’s no green paper. This means important decisions about taxes, spending and public policy are made without consultation.
The IFS Green Budget 2021 is produced in association with Citi and with funding from the Nuffield Foundation. It analyses the big decisions confronting Chancellor Rishi Sunak as he continues to decide how policy should respond to support households, business and public services in the coming year and beyond.
Pressures on the NHS
The COVID-19 pandemic has had deep and far-reaching impacts on the National Health Service (NHS), putting incredible pressure on a health system that was already struggling to meet many of its constitutional targets even before the pandemic.
An ever-growing NHS budget could swallow up all of this week’s tax rise, leaving little for social care
This week saw major announcements on health and social care funding. Outside of the usual Budget or Spending Review process, the government announced around £12 billion of additional spending for the Department of Health and Social Care for each year between 2022−23 and 2024−25, alongside a corresponding tax rise.
An initial response to the Prime Minister’s announcement on health, social care and National Insurance
Today’s announcements constituted a Budget in all but name. £14 billion of tax raised through a supposedly new tax, equivalent increases in spending on health and social care, and an announcement of spending totals for the next three years certainly constitute a major fiscal event. After a quarter century of dithering we may finally have settled on a solution for improving the structure of social care funding, as well as an increase in the amount spent publicly on it. We have a funding package for the NHS which should be enough to prevent post pandemic waiting lists from spiralling. For “unprotected” departments, the announced spending totals might be enough to avoid cuts, though this is far from certain and depends on the extent of future virus-related spending.
Could NHS waiting lists really reach 13 million?
Since the start of the pandemic, the number of people waiting for NHS treatment in England has grown by a fifth. 5.3 million people were waiting for treatment in May 2021, up from 4.4 million in February 2020. There has been a particularly sharp increase in the number of people waiting for longer than a year, causing widespread concern over the scale of the NHS ‘backlog’.
What does the changing economic outlook mean for the Spending Review?
As lockdowns are lifted and more economic activity is resumed, the extent, speed and nature of the UK’s economic recovery from the pandemic will be a crucial determinant of the Chancellor’s options at the upcoming Spending Review, expected this autumn. Recent data releases and independent forecasts have painted a more optimistic picture for the economic recovery in the near term than previous forecasts had suggested. In line with this, Citi’s latest economic forecast suggests that growth in both real and nominal terms will be higher this year than official forecasts expected at the Budget in March.
The expiry of the Universal Credit uplift: impacts and policy options
New statistics released by the Department for Work and Pensions give us the latest picture of who is claiming Universal Credit (UC) and how much the temporary uplift matters. By February this year there were 5 million UC claimants – double the number seen pre-pandemic. Almost all of these claimants are benefiting from the temporary £20 per week uplift in UC, due to expire at the end of September.
This work was funded by the Nuffield Foundation as an early output of the 2021 IFS Green Budget.