Government finances and spending

In this webinar, IFS researchers discussed the options the government faces as it considers unwinding, adjusting, or making permanent the temporary Covid-19 benefit increases; and the opportunities this moment presents to address issues with the system that existed prior to the onset of the crisis.

This paper explores the challenges and constraints around fiscal stimulus measures in lower-income countries, and in the context of a global pandemic, and puts forward tax, transfer and other government spending options that offer potential for success.

As for phase four, the return to normality, Mr Sunak needs to learn one big lesson from policy in the wake of the financial crisis. From 2010 on that policy was dominated by the desire to reduce the deficit. But it lacked a crucial second leg: an actual economic strategy focused on productivity, growth and economic success. Phase four must not just be about getting the huge deficit down. It must involve a smart economic strategy for infrastructure investment, education, economic governance, tax reform and more besides.

The COVID-19 crisis is having immediate effects on councils’ budgets as a result of increases in spending on local services and reductions in income from sales, fees and charges and commercial activities.

At this online debate, an expert panel reflected on what the future holds for capital gains tax. Could CGT be a post-covid cash cow for the Treasury or would higher rates and smaller reliefs lead to lower investment and less revenue?

From today, the first 18-year-olds will be able to access Child Trust Funds (CTFs) set up over a decade ago by Tony Blair’s Labour government. When first announcing the policy, the government pointed to the fact that ‘people without assets are much more likely to have lower earnings and higher unemployment, and are less likely to start a business or enter higher education’. But how much difference might these accounts make to the finances of 18-year-olds?

The COVID-19 crisis is increasing councils’ spending and reducing their incomes. This report analyses councils’ forecasts of these pressures and potential policy responses.

European Structural and Investment (ESI) funds help to pay for initiatives supporting business development, research and development, investment in digital and green infrastructure, as well skills and training interventions and support for job-seekers. But with the UK having formally departed the European Union, the country will stop receiving new ESI funding at the end of 2020. Thus, for 2021 and beyond, the UK government faces choices over what to replace ESI funding with.

In this special joint webinar, the Institute for Fiscal Studies (IFS) and the National Institute of Economic and Social Research (NIESR) examined the impact of the Covid-19 crisis on the public finances.

Reports indicate the government is considering a temporary cut in VAT to stimulate consumer demand, possibly targeted at sectors such as tourism and restaurants. Overall the case for a temporary VAT cut now is mixed. It could provide an important fillip to consumer demand if implemented under the right conditions. Its expiration must be carefully timed so as not to choke off a nascent recovery.