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Institute for Fiscal Studies Profile picture
@TheIFS
Oct 7, 2021 • 5 tweets • 4 min read • Read on X
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NEW: English #councils will need billions more from government and big #counciltax rises just to maintain services at their pre-COVID levels.

Read our #IFSGreenBudget chapter on local government funding, funded by @NuffieldFound > ifs.org.uk/publications/1…
One issue with using council tax to raise revenues is that increases generate less for councils in poorer parts of the country.

This means bigger increases to tax rates or cuts to services in poorer areas, unless government redistributes grant funding from richer areas.
As COVID pressures abate, underlying demand and cost pressures will grow, pushing up what councils must spend to maintain services.

Our central projection is that councils will have to spend £10bn more in 2024 than in 2019 – but several factors could push costs up even more.
The government is providing £5.4bn over the next three years for social care reform. It seems unlikely it can achieve everything it wants with this amount – long-term, the reforms are more like £5bn a year.

Without extra funding, some care recipients could actually lose out.
Read the full #IFSGreenBudget chapter for our analysis of issues for Wales, funding and local tax reform, devolution, and social care, and join our event at 11am today here > ifs.org.uk/events/1933

ifs.org.uk/publications/1…

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More from @TheIFS

Institute for Fiscal Studies Profile picture
Sep 27
NEW: Public sector pay has declined relative to the wider pay distribution, especially for higher earners.

@JCribbEcon @awmckendrick @m_dominguezp’s Green Budget chapter examines the pressures on public sector pay and the implications for recruitment & retention:

[THREAD: 1/11] Image
The new government has accepted in full the independent 2024 Pay Review Body recommendations, with average pay rises of 5.5%.

This is ahead of inflation, and close to private sector pay growth.

[2/11]
Pay in the public sector has evolved less favorably than in the private sector in recent years.

While private sector pay is 6% higher than it was in early 2019 in real terms, public sector pay is up by only 1%.

[3/11] Image
Read 11 tweets
Institute for Fiscal Studies Profile picture
Sep 19
NEW: Health-related benefit claims have risen substantially across England and Wales, with increases in mental health claims across all ages.

There is little evidence of similar trends in other countries.

THREAD on our new report on health-related benefits:

[1/7] Chart shows share of working-age population claiming selected health-related benefits: selected countries (indexed to 2019). Title states: "The rapid growth in health-related benefits seems to be largely a UK phenomenon."
There has been rapid growth in the health-related benefits caseload since 2019. 1 in 10 working-age people in England & Wales now claim a health-related benefit.

@OBR_UK projects further growth of 19% for incapacity benefits & 41% for disability benefits from 2023 to 2028. [2/7] Chart shows share of working-age population claiming health-related benefits. Title states: "The caseload for incapacity benefits has grown by 28% since 2019–20, and the disability benefits caseload by 39%."
A higher caseload means higher spending. The UK now spends 1.7% of GDP on working-age health-related benefits.

This is up from 1.3% in 2019 but is still close to the OECD’s 2019 average of 1.6%. However, @OBR_UK forecasts that spending could rise to 2.1% of GDP by 2028.

[3/7] Chart shows sickness and disability benefits cash spending as a share of GDP: OECD countries (2019) and UK (2019, 2023, 2028). Title states: "Despite recent increases, the UK’s spending on working-age health-related benefits is still similar as a share of GDP to other comparable countries."
Read 7 tweets
Institute for Fiscal Studies Profile picture
Jul 25
NEW: Rising mortgage interest rates pushed 320,000 into poverty by December 2023, but only two-thirds of that will be captured by official statistics.

THREAD on Sam Ray-Chaudhuri, @TomWatersEcon & Tom Wernham’s @JRF_uk-funded living standards, poverty & inequality report:

[1/7] Charts show mortgagor absolute poverty rate (after deducting housing costs), under alternative interest rates. Title states: "Higher mortgage interest payments pushed 320,000 mortgagors into poverty by December 2023."
Mortgage interest rates have risen rapidly since June 2022.

These increases have not impacted all mortgagors, but those whose fixed period ended recently have faced much higher interest rates, which can increase payments by thousands of pounds per year.

[2/7] Chart shows average interest rate on new loans/remortgages (weighted by loan value). Title states: "Average mortgage interest rates for re-mortgagors had risen to more than 5% by December 2023."
Higher mortgage interest rates have caused poverty among mortgagors to rise from 7.9% to 9.3%, equivalent to 320,000 more people.

Official statistics use average interest rates to calculate mortgage payments, and so will only capture two-thirds (230,000) of this rise.

[3/7] Chart shows mortgagor absolute poverty rate (after deducting housing costs), under alternative interest rates. Title states: "Higher mortgage interest payments pushed 320,000 mortgagors into poverty by December 2023."
Read 7 tweets
Institute for Fiscal Studies Profile picture
Jun 24
STARTING NOW: @PJTheEconomist opens our IFS event analysing the 2024 General Election manifestos:

📺 Watch live here:

Ask questions here:
app.sli.do/event/9esN5Dd8…
- @PJTheEconomist: The "raw facts" on the public finances and funding for public services "are largely ignored by the two main parties in their manifestos."

"They have singularly failed even to acknowledge some of the most important issues and choices."
@PJTheEconomist Low growth, high debt and high interest payments means "to stop debt spiralling ever upwards we need to run primary surpluses."

"That means the government collecting more in tax and other revenues than it spends on everything apart from debt interest."

- @PJTheEconomist
Read 15 tweets
Institute for Fiscal Studies Profile picture
Jun 11
NEW: In advance of the Conservatives confirming their tax plans for the future today, we've assessed their record on tax policy in last 14 years.

THREAD on @HelenMiller_IFS, @StuartAdam_IFS and Bobbie Upton's new report, funded by @NuffieldFound @finan_fairness:

[1/11] Image
Tax revenue as a share of national income, at 36%, is higher now than at any point since 1948 and forecast to rise further.

The 2019-24 parliament saw the biggest rise in the tax take of any parliament in modern history.

[2/11] Image
The composition of revenue has changed.

Relative to 2010, more tax revenue is being raised from income tax, VAT, corporation tax and capital taxes. Less is being raised from fuel and tobacco duties and business rates.

[3/11] Image
Read 12 tweets
Institute for Fiscal Studies Profile picture
Jun 9
NEW: The size of the state – spending as a proportion of national income – has increased by significantly more under this parliament than under any previous post-war Conservative parliament. A large part of this increase looks to be permanent.


[🧵: 1/11] ifs.org.uk/publications/h…
Image
The state was the same size in 2019-20 as it was in 2007-08.

Almost a decade of austerity simply reversed the growth in the state that happened during the financial crisis, and returned the size of the state to where it had been after a decade of New Labour governments.

[2/11] Image
Returning the size of the state to 2007-08 levels after the financial crisis meant very slow spending growth over the 2010s compared to the historic average, particularly in a context of relatively weak economic growth.

[3/11] Image
Read 11 tweets

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