Analysis of General Election policy proposals from main political parties
The Institute for Fiscal Studies
As the general election approaches, the IFS will present rigorous, evidence-based and independent analysis of key policy issues in areas such as the public finances, living standards, working-age benefits, taxation and public services.
Briefing: Public investment, what you need to know
April 2024
The Labour party may have scaled back its high-profile promise for £28 billion a year of green investment, but the parties’ plans for public investment are still likely to prominently feature in the election debate. More generally, public investment is a policy issue of central importance for public service delivery, economic growth, the UK’s climate ambitions, and much else besides.
In a pre-election briefing funded by the Nuffield Foundation and the abrdn Financial Fairness Trust, IFS has published a new explainer covering the key questions around UK public investment – including how Conservative and Labour plans differ.
What is public investment? Why does it matter? How does investment fit into the fiscal rules? Does the debt target adopted by Labour and the Conservatives limit the government’s ability to borrow to invest? What do their plans imply? Should we adopt a broader definition of what counts as investment? And how does the UK compare internationally?
Read the explainer here
Recent trends in and the outlook for health-related benefits
April 2024
Individuals in the UK with health conditions may be entitled to two types of benefits – incapacity benefits (for those whose condition prevents them from working) and disability benefits (to help with extra living costs arising from the disability). Since the onset of the pandemic, there has been a substantial increase in the number of individuals claiming these ‘health-related’ benefits – and official projections suggest that claimant numbers will rise further still. Whoever wins the next election will have to come to terms with these trends and potentially provide a policy response. Indeed, the government has already announced a number of reforms to the health-related benefit system in the last year, including a consultation – announced by the Prime Minister in April 2024 – on tightening the disability benefit system. This report sets out the latest data on health-related benefits in the UK and discusses the evidence on potential causes for the rise, before considering the policy options.
Comment: Raising revenue from closing inheritance tax loopholes
April 2024
The Spring Budget introduced a new relief in inheritance tax. While fiscally very small, this new allowance for passing on land used for ‘environmental land management’ adds to a lengthy and costly set of reliefs and exemptions in the tax. There are several reforms that could be enacted that would move towards closing some of these loopholes, make the system fairer, and raise revenues that could be used to reduce the main rate of inheritance tax or fund other tax and spending priorities. Specifically, abolishing the exemption given to a certain class of shares, limiting the scope of agricultural and business reliefs, and bringing pension pots into estates could raise around £1.6 billion, £1.8 billion, and £0.4 billion, respectively, in 2029–30.
Comment: Spending as much as other countries but taxing less is unlikely to be sustainable
April 2024
The UK started the 21st century with an overall budget surplus: the government raised more in revenues than it spent. It had a much smaller state in terms of tax and spend than many other comparator countries and one of the lowest levels of government debt. Since 2001, the size of the UK’s state (measured as public spending as a fraction of national income) has moved closer to the average of comparator countries. New IMF forecasts suggest that over the period since 2019 the UK will have had the biggest increase in revenues out of 37 comparator countries. Despite this, the increase in revenues since 2001 has not kept pace with the UK’s increase in spending. In other words, although the UK now looks like an “average country” in terms of how much it spends, it still raises less than an average amount in tax.
Since 2005 this has led to consistently above-average public borrowing and a massive increase in government debt that is second only to that seen in Japan. With comparatively much weaker expected growth going forward, this situation leaves the UK’s public finances in a relatively fragile position, and whoever is Chancellor after the next general election will have to make some difficult judgements. In particular, for the UK to maintain spending levels that are more average compared to other countries, it will likely need to tax more like them too.
Recent trends in public sector pay
March 2024
The gap between higher- and lower-paid public sector workers falls by more than a third since 2007 as doctors and experienced teachers have faced unprecedented pay cuts.
Living standards since the last election
March 2024
New income statistics suggest this parliament is on course to be the worst for living standards on record.
A longer-term view of NHS waiting lists in England
March 2024
The performance of the NHS will likely be frequently debated between now and the upcoming general election. And the measure most often used is the size of the waiting list. But most analysis of waiting lists, including The IFS's recent pre-election briefing (see below)
Reforming the taxation of non-doms: policy options and uncertainties
March 2024
The taxation of non-doms is a complex area and has been reformed significantly in the past 20 years. In this report the IFS summarises what is known (and not known) about non-doms and the key policy issues involved with ‘scrapping’ or reforming their current tax regime.
Getting English NHS waiting lists down to pre-pandemic levels is highly unlikely within the next parliament
February 2024
The NHS waiting list in England stands at 7.6 million, almost 400,000 higher than it was in January 2023 when the Prime Minister promised to get waiting lists falling and 3 million higher than pre-pandemic levels. Yet recent months have shown signs of hope. The waiting list fell for three consecutive months at the end of 2023 (from 7.8 million in September to 7.6 million in December). This partly reflected seasonal factors (the waiting list tends to fall at that time of year), but also genuine increases in NHS treatment volumes.
By the general election, NHS waiting lists in England are likely to be steadily falling. That would be a very welcome development. But getting waiting lists and – perhaps more importantly – waiting times back down to pre-pandemic levels will take years and, more likely than not, more than a full parliamentary term.
Any party serious about governing must resist the temptation of cakeism
January 2024
A new government will inherit taxes at record levels for the UK; living standards that have endured a record-long stagnation; and public services – health, local government, prisons, the justice system – that are visibly struggling, and performing less well than they were back in 2010. Yet current spending plans imply further cuts for most public services other than health. The political parties must be honest with the public about the tough trade-offs they will inevitably have to make on tax and spending.
