Government finances and spending

The Conservative Party have claimed that under Labour there would be a £3,028 tax rise for every working household. This new observation explains this number and assesses whether this would actually be the case.

The current parliament has seen five successive years of fiscal tightening – with taxes being increased and spending cut to bring to UK’s public finances back towards a more sustainable position. Until last week the government’s plan was that this austerity would continue through virtually the whole of the next parliament. However, despite no substantively new information about the outlook for the economy, last week’s Budget saw the government alter its long-term economic thinking – announcing that austerity will end one year earlier than previously planned and leaving the UK with a smaller budget surplus in the medium-term than was planned in December. In the light of the March 2015 Budget, this observation sets out more detail on the currently planned timing and composition of the overall fiscal tightening.

The BBC has reported that civil servants and Conservative ministers have been holding discussions about possible cuts to benefits. This observation provides a brief discussion of these potential reforms and sets them in their wider context.

There weren’t too many new policies in this week’s budget but it still set some almighty challenges for the next government, whichever party finds itself in charge.

This presentation was delivered for a lunchtime seminar at the Department for International Development (DfID) on 23 March 2015.

Presented at the IFS Post-Budget Briefing 2015 on 19th March, 2015.

School funding per pupil has increased substantially since the millennium, with a particularly sharp increase for deprived schools. This Observation draws on new IFS research which both describes the scale of these spending increases and the areas on which the new resources have been spent.

As part of its deficit reduction programme, the coalition government has made numerous tax changes whose direct impact is to reduce borrowing by an estimated £16.4 billion in 2015–16. This Observation – and the accompanying new Election Briefing Note – shows how all this activity has done little to improve the structure of the tax system. Plenty of challenges remain for whoever wins the election in May.

A new tool launched on the IFS election website today allows you to act as Chancellor and set your own Budget. Complete with data visualisation and infographics, the interactive tool guides you through the challenging tradeoffs involved when deciding how much to tax, how much to spend, and how much to borrow over the next few years.