On 17 October, I'll be the least impressive panel member at this event at the LSE, debating the role of independent institutions and technocrats in guiding UK fiscal policy. If that sounds like your idea of a good Friday night, sign up here: www.eventbrite.com/e/a-sustaina...

On 16 October we're launching this year's IFS Green Budget, looking at the major challenges & choices facing the Chancellor this autumn. Sign up for our event! Analysis from IFS & Barclays, plus reflections from Jonathan Haskel & Andy King. It'll be great. ifs.org.uk/events/ifs-g...

There are some eye-popping stats in this new report from my IFS colleagues. Here's just one: 10% of teenagers now receive child disability living allowance (CDLA), up from 5% a decade ago. Just a remarkable change.

On the question of one vs two OBR forecasts per year... The IMF said first best option would be to operate with more ‘headroom’. They did not call for one forecast. They suggested that the rules could be assessed only once per year, but explicitly said that two forecasts per year is best practice!

Some great charts in this report. This one is my favourite. The UK has signed up the new NATO commitment to spend 3.5% of GDP on defence. The scale of the increase is fiscally challenging, and we've given ourselves a decade. Poland, on the other hand, has done it in just two years.

Three years on from Liz Truss and Kwasi Kwarteng's mini budget, I've written for @theobserveruk.bsky.social about its legacy and the lessons the Chancellor, her team and her backbench MPs (including would-be MPs) should keep in mind this autumn. This point is especially important.

Key charts from a great thread. Careful analysis by my @theifs.bsky.social colleagues shows that the two-child benefit limit has had no detectable impact on school-readiness at age 5, including among the poorer children most likely to be affected. Key policy takeaway: scrapping the ... [1/3]

Not a surprise, but no less significant for that: this OBR decision will shape much of the fiscal arithmetic this autumn. The other big Budget-relevant decision this week lies with the Monetary Policy Committee, who will decide whether to continue with active bond sales. 1/3

A key factor at the next election will be the state of Britain's public services. That will depend on whether the government can make those services more productive, to deliver more without huge cash injections. Join our @theifs.bsky.social event on Friday to hear more: ifs.org.uk/events/how-a...

This is worth reading. Our current fiscal framework and policymaking process has shortcomings and it’s good for this stuff to be debated. The proposed reforms to monetary policy are far more radical than the suggested fiscal rules “rewrite”, though, so the framing is a bit odd 🧵

We are just the only country stupid enough to discuss "black holes" every time yields rise 10bps

Good column. Worth emphasising that the government does deserve blame for the 2nd of these, for choosing to have a pass-fail fiscal rule and aiming to meet it almost exactly (with ~zero "headroom"). Means macroeconomic or gilt market volatility --> policy volatility and tax speculation.

This is a weird line. Whatever you think of Rachel Reeves and her broader record, she very much did tweak the fiscal rules, and she very much did announce an increase in capital investment.

There's an important debate to be had on the wisdom of simultaneously increasing employer NICs, the minimum wage and employment rights. The jobs market does look weaker. But an alternative reading of this chart is that employment has just continued on its pre-election trend?

IMF report today stresses importance of fiscal policy stability, but notes current framework isn't delivering it. Chimes with our @theifs.bsky.social piece from Monday. IMF recommendations also overlap with ours: ideally have more 'headroom' & apply target as a range between Budgets).

An eye-catching stat from a recent ICAI report: By 2027/28, UK aid spending excluding domestic support for asylum seekers (i.e. ‘traditional’ aid spending on stuff like famine relief) will be at its joint-lowest level in 50 years -- lower than in every year of the Thatcher government.

This piece is more thoughtful than the provocative title suggests. The key argument, with which I agree wholeheartedly, is that we need to move beyond debates about spuriously precise estimates of "fiscal headroom" and stop the constant policy tinkering that results.

We absolutely need to break the obsession with "fiscal headroom" & the policy volatility that comes with it. IMF proposals worth considering & might help on the margin. But I increasingly think we need to consider deeper changes to the fiscal framework. on.ft.com/4lFQ24J

OBR fiscal risks report is fascinating and important, as ever. I'm particularly struck by the analysis of declining demand for gilts from defined benefit pension funds. In all scenarios, government will be left more reliant on other buyers of its debt (hedge funds, overseas investors).

This is a good idea. If NHS spending plans are predicated on targets for productivity growth, there needs to be a high-quality, agreed upon measure of productivity that can be used to hold NHS providers to account. NHS England spending amounts to ~7% of GDP, after all. www.gov.uk/government/p...

I think it's under-appreciated in UK politics that now is just isn't a good time for government to be borrowing more - or signaling that it intends to borrow more. We're in the middle of what has been described as a "global bond glut". Borrowing is expensive. It's not the 2010s.

It seems to me that from a fiscal perspective, the direct impact of the last-minute changes to the welfare bill (reportedly ~£1.5bn) is perhaps less important than the signal it sends: that this government with a majority of 165 is seemingly unable to deliver any meaningful cuts to public spending.

@benzaranko.bsky.social and I have a new paper out in the Oxford Review of Economic Policy on the future of health and social care provision in the UK. It sets out the challenges and opportunities for increasing inputs and productivity in the NHS and adult social care in the coming decades

This is a good one - goes beyond the ups and downs of the Spending Review to tackle the big questions, like: should we borrow for defence? Is PSNFL a good measure of debt? What's wrong with council tax? Will taxes go up later this year? And why are we even here?

One weird thing about the efficiency drive announced yesterday is that we got (1) a detailed, bottom-up piece of work from the Office for Value for Money on the scope for savings in each department (2) top-down plans for all departments to make the precise same % cut to admin budgets

Please look at this chart, so that the embarrassing amount of time I spent last night calibrating the size of each circle to correspond to the £ increases wasn't all a waste. Defence and net zero the biggest winners on capital funding: says a lot about government priorities.

One for the fiscal enthusiasts: This Spending Review marks the first proper shift towards what we might call "PSNFL-friendly" policy: more loans, equity investments and guarantees, which don't count against the government's chosen debt rule. Suspect we'll see more of this in years to come.

Keep an eye on local government "spending power" as well, for the implied increases in council tax those calculations depend on...

To those hoping to make sense of this Spending Review: be careful with time periods. Most of the % growth numbers the Chancellor is using are for 2023/24 to 2028/29 (the full parliament), including the cash injections provided last year & this year. Funding for 2026/27 onwards growing less quickly.

The backlog of outstanding cases waiting to be heard in the Crown Court has doubled since 2019, and keeps rising – despite increases in funding and resources. What’s going on? A new @theifs.bsky.social report looks at whether the Crown Court has become less productive: ifs.org.uk/publications...

The IMF proposals for tweaking the fiscal rules are interesting and merit consideration. But some of the coverage is wide of the mark. Changing the rules, as the IMF suggest, to allow more flex *between* major fiscal events wouldn't make Reeves' life any easier at the Autumn Budget.

An example of the sort of things you can do with this tool... Let's say you've decided the UK needs to spend more on defence, pronto. President Trump wants the UK to spend 3% of GDP on defence, so let's aim for that. It would require an extra £17bn or so in 2029/30, compared to current plans. 🧵

Ahead of a big Spending Review and a big Budget, we’ve updated and revamped our ‘Be the Chancellor’ tool. It’s got new features, new charts, new fiscal rules, and new policy options. Have a look and share with the fiscal nerds in your life (it works best on desktop): ifs.org.uk/be-chancellor

Lo and behold...

Fantastic opportunity here for a tax nerd

The number of working-adults receiving health-related benefits grew by 40% between November 2019 and May 2024. Could longer NHS waiting lists – which grew by 67% over that period – be to blame? Our new @theifs.bsky.social research concludes: no, probably not 🧵

Putting the chart crime here to one side... This partly just reflects seasonal trends. Outside of the pandemic period, the NHS waiting list almost always falls in winter, when fewer people join the queue. Wouldn't shock me at all if it starts ticking back up over spring/summer.

Government spending in £ per person is much higher in London than elsewhere. The gap in per person transport spending is particularly wide. But here’s something I hadn’t realised: as a % of regional GDP, public transport spending is no higher in London than it is in the North East (both ~2% GDP).

Rather than doom-scrolling/trying to desperately learn what a ‘Treasury basis trade’ is, why not play with our new tool instead? Allows you to see, in lots of detail, how much the government spends on different things in each region (£, £ per person, % GDP). I’ll post some nice examples later.

There's bigger news today, obviously (RIP my stocks and shares ISA), but... New stats show a big reduction in spending on asylum support within the aid budget (from £4.3bn in 2023 to £2.8bn in 2024). If that continues it would make the ODA cut from 0.5% to 0.3% of national income a bit less painful

Interesting (and punchy!) from @chrisgiles.ft.com www.ft.com/content/2433...

I think this is a good one - a colleague described it as "having slightly manic energy, but in a good way". Worth a listen in my extremely biased opinion.

What happened the last time a Labour government tried to bear down on departmental administration costs? 🤔 A great chart from IFS analysis of the 2004 Spending Review

Thinking about getting some variation of this as a tattoo

The most significant things in the Spring Statement were, in my view: 1) benefit reforms (a big deal); 2) the OBR scoring supply side impacts of planning reform (an important precedent); and 3) the details of the aid cut and defence increase. A nerdy thread on the details of 3)… 🧵

It’s entirely reasonable to suggest that public sector reform involves up-front costs, and use this as justification for front-loading spending plans with a 'Transformation Fund'. Fair enough, perhaps. But governments always find an excuse to front-load spending plans... and then top them up later.

The government's borrowing rule (the ‘stability rule’) is being met by £9.9 billion in 2029/30, the *exact* same amount as last October. Nothing special about that number. Implies that policy is being fine-tuned in pursuit of an arbitrary number for ‘fiscal headroom’. Chasing the model.

It's important, when thinking about possible cuts to spending plans for the next few years, not to disregard the substantial short-term funding injection announced last autumn. Increases of 1.3% or 1.1% per year would be from a much higher starting point than under Jeremy Hunt's pre-election plans.

When asked why the fiscal situation is so difficult, this is the chart I keep reaching for. The combination of low growth and high debt interest really does make things unusually hard for the Chancellor – especially so with simultaneous pressures on health and defence.

Hell hath no fury like an IFS researcher unhappy about the choice of discount rate used to produce official wealth statistics