Once it's all over (Covid-19, not 2020) how do we repair the public finances?

09 December 2020

Our partners at Resolution  Foundation produced a report full of recommendations for the Chancellor. The biggest of which was the recommendation the Government should introduce a new Health and Social Care Levy as part of a £40 billion plan to repair the public finances.

Unhealthy finances examines the optimal timing, pace and strategy for repairing the public finances in the wake of the pandemic, and the scale and range of tax rises needed for a credible fiscal consolidation plan. And if you fancy being Chancellor for the day, do play around with the Tax Calculator Demos developed as part of a project we supported on taxation.

How has Covid-19 changed society?

We funded the IFS to carry out real-time analysis of bank account data and they found inequalities were increasing during the lockdown. ‘Forced saving’ has been significant across the income spectrum, however they found it was greater for higher-income households mainly due to falls in spending. In contrast, the poorest households saw an average £170 per month decline in their bank balances between March and September as incomes failed to keep up with expenditure.

The next report from the IFS series is out later this month. The IFS also have an event coming up on this programme (see below for details).

What happens if the Chancellor goes ahead with planned cuts to Universal Credit?

The Fabian Society warned that cuts and mass unemployment risk plunging 3 million into poverty. As part of their programme on social security they reported that if Universal Credit was returned to pre-pandemic levels an additional 1.1 million people would find themselves below the poverty line.

How should we reward frontline staff?

Earlier this week the RSA made a number of recommendations to improve conditions for key workers.  In a new report Double Trouble, funded by the Foundation, the RSA found frontline staff still feel stressed and at burn-out point. The authors call for a ‘new deal’ to reward and support those who provide critical frontline services, including paying a real living wage and enhanced sick pay.

What is needed for families in Scotland facing a Covid-19 winter?

IPPR Scotland, who we are supporting to review the social security system in Scotland, warned the five tier coronavirus system could put many under severe restrictions as we approach winter, putting families’ finances under even greater strain.

Weathering the winter storm revealed that up to one in ten Scottish households were behind on bills just as we entered the Covid-crisis and 45 per cent of Scottish workers experienced some form of pay drop during the first lockdown.

What next?

With just under two months to go until our next application deadline, we’re pleased to announce our latest grant awards below. The variety of these awards demonstrates the breadth of what we fund at the Foundation, if you have an idea you think we might fund, have a read of our funding guidelines and get in touch. 

New grant awards

Bevan Foundation – Research and policy work to address the problem of low-income and self-employment in Wales.

Manchester Metropolitan University (Policy Evaluation Research Unit) – Tax and benefits – a review of work incentives in the UK

National Institute of Economic & Social Research (NIESR) – Tax in the UK: analysis of a progressive consumption tax

The Living Wage Foundation – Living pensions

University of Edinburgh - Pension savings – impact of financial insecurity for older workers

University of York (Centre for Housing Policy) – Home ownership schemes for low-income households