Government spending

The Prime Minister has committed to spending increases for the NHS over the next five years and promised this would be at least partly funded by a ‘Brexit dividend’. This is not the first time that NHS spending increases have been linked to the UK’s exit from the EU – the now infamous £350 million per week pledge was a significant feature of the 2016 referendum campaign.

Yesterday we heard the first details of a new five-year funding settlement for the NHS in England. It was announced NHS England funding would be slightly more than £20 billion higher in 2023-24 than in 2018–19 after adjusting for forecast economy-wide inflation over the period. This represents a larger increase in funding for the NHS than we have seen in the last 8 years, but remains below historical average growth in UK health spending (3.7% per year).

Following widespread austerity measures introduced in 2009/10, public funding for adult social care has fallen substantially. In particular, funding for social care for people aged 65 and older has been particularly hard hit, falling by 21% between 2009/10 and 2015/16. While some additional money in recent years has reversed some of these cuts, these funding decisions are likely to have had a number of consequences for users of social care, their carers and for other related public services. But what do we really know about their impact?

Analysis of the SNP’s Sustainable Growth Commission’s proposals

Ministers will have to make unpopular decisions on taxation to raise health service funding, says Thomas Pope of the Institute for Fiscal Studies.

How should we fund social care? When you try to answer such a big question, you quickly realise there are a whole host of underlying questions one needs to think about.

For the new 2018–19 tax year, the Scottish higher-rate threshold has fallen further behind that in the UK, and two new income tax bands have been added in Scotland while the higher- and additional-rates have been increased. While most Scots will be either unaffected or pay slightly less in tax, overall the change will raise revenue as a result of higher earners paying more. This observation argues that while these changes represent small tweaks to the system rather than a major overhaul, differences between the Scottish and UK income tax systems could have significant implications for taxpayer behaviour going forward.

This article by Paul Johnson, published in the Times Newspaper, looks at the issue of hypothecating taxes for the NHS.

When a Chancellor delivers his Budget, the question people naturally ask is ‘why does this matter for me’. Often that means looking out for the newly announced tax and spending measures. For some, the policy measures announced in November – for example the removal of Stamp Duty for most first time house buyers, or another year of fuel duties being frozen in cash terms – will be fairly significant.

This presentation was given at the IFS Autumn 2017 post-Budget briefing.