Government finances and spending

Paying benefits to people of working age is a big part of what the government does.In fact, it spends more on these benefits than it does on education or national defence and policing. They account for roughly £1 in every £8 the government spends, or about £100bn a year. This is on top of the £120bn that is spent on benefits for pensioners. A look at the size of the bill and who gets these benefits reveals big changes over time.

Years of cuts and rising demands for services like social care mean that council funding in England looks increasingly unsustainable. Is devolving more tax revenues and powers the answer?

The Spring Statement is a timely reminder that the nation faces challenges beyond Brexit. Slow economic growth is expected to continue, the deficit is still some way from being eliminated, and further cuts for unprotected public services are expected.

The government spends an astonishing £22 billion a year on housing benefit. That dwarfs spending on the police, on overseas aid and the budgets of many entire government departments.

Not only has the reduced system of council tax support hit low-paid workers but it has proved remarkably ineffective as a way to raise revenue, say the IFS’ Stuart Adam and Thomas Pope.

The value of the pound has changed a lot over the past three years - making us all a little poorer. Back in December 2015, £1 would buy you about €1.40. Today it will get you nearer €1.14. It has suffered a similar fate against most major currencies, losing about 15% of its value over that time. A big part of the fall occurred literally overnight, once the result of the EU referendum became apparent in the early hours of 24 June 2016. That's a big change, but what does it mean for all of us?

Ahead of a proposed move from 50% to 75% business rates retention in April 2020, the Ministry of Housing, Communities and Local Government is seeking views on its proposals for the reform of certain elements of the business rates retention system in England.

The present system of local government finance isn’t sustainable. Something is going to have to give.

This presentation was given at the launch of the report 'The impact of localised council tax support schemes' on 29 January 2019.

How is local government funding changing? And what might the implications for children's services be? In this presentation for the Office of the Children's Commissioner of England, IFS Associate Director David Phillips looked at the trends in local government spending over time, across the country, and across services, paying particular attention to children's services. He also looked at what funding reforms (such as shifts to funding more services via business rates, and the so-called Fair Funding Review) mean and how they could impact different areas and services.

What does the fiscal and funding outlook for English councils look like? In this presentation for the LGA's annual finance conference, IFS Associate Director David Phillips looked at recent trends, the future outlook, and interactions with funding reforms. It shows that despite the end of overall budget cuts, councils facing both uncertainty about future funding levels and the likelihood that local tax revenues will not keep pace with rising costs. 2019 will be a big year for decisions - with important ramifications for the 2020s and beyond.