It's only a "£75 billion increase" over 6 years if you assume that spending would otherwise have been frozen in cash terms for 6 years - i.e. only if the government was, until today, planning to breach its NATO commitments. This is such an unhelpful way to present the figures.

https://twitter.com/hmtreasury/status/1782835257491829233

To get the £75 billion number, the government has assumed a baseline with spending frozen in cash terms and then added up all of the differences. If you instead assume a baseline of spending frozen as a % GDP, it's an extra £20 billion over 6 years. Details here.

I have a lot of sympathy with the critiques of the current set of fiscal rules, and some sympathy with the critiques of fiscal rules more generally. But too often, "I don't like the fiscal rules" actually seems to mean "whatever the question, the answer is more borrowing". 🧵 Two things are simultaneously true:

1) The current set of fiscal rules are poorly designed and are being relentlessly and unashamedly gamed

https://x.com/TheIFS/status/1764637946009776621?s=20

A quick thread on the discount rate used to value public sector pensions and why this matters.

This is, admittedly, aimed squarely at the fiscal nerds, but stick with me - it's important and could be key to understanding the next spending review 🧵

https://twitter.com/TheIFS/status/1643909906569785344?s=20

Here's the £2 trillion question: how should the government value the promise of a pension to public sector employees, when those pensions will only be paid out in many years' time?

The answer to this (surprisingly contentious) question matters because...

The additional cash allocated to the NHS at the recent Autumn Statement is sufficient, over the full five-year parliament, to offset only around half of the real-terms hit from higher inflation.

From today's new @TheIFS report: ifs.org.uk/publications/n… To spell this out a little: the original intention was to increase the NHS budget by 3.4% per year in real-terms between 2019/20 and 2024/25. Higher inflation would have reduced that by 1.1% per year (to an average of 2.3%, shown by the yellow bar). But...

The NHS has more funding and more staff than it had pre-pandemic. At the same time, across most types of care, the NHS is treating fewer patients than it was pre-Covid and is clearly struggling heading into the winter.

What's going on? A thread, based on new @TheIFS research 🧵 The full report, co-authored with my colleague Max Warner, can be found here. It focuses on the NHS in England, and uses only publicly available data.

ifs.org.uk/publications/n…

I don't think this number is accurate. At best, it paints an incomplete picture.

A quick on why 🧵

https://twitter.com/BBCPolitics/status/1601175864246358017

The government has claimed that offering an inflation-matching pay award to all public sector workers would cost £28 billion. There's around 28 million households in the UK. So that's equivalent to around £1,000 per household. But I think there's a few problems with this.

The size of the NHS waiting list continues to creep upwards: it now stands at 7.21 million.

3 quick takeaways: 🧵 1) Within the total, the number of patients who have been waiting more than 18 months fell slightly month-on-month (by 1.3%), as did the number who have been waiting more than 2 years (by 14.8%). The NHS is continuing to successfully prioritise very long waiters.

The NHS waiting list in England (the ‘backlog’) now stands at 7.1 million, 60% higher than pre-pandemic.

This backlog is still growing month on month. Why? And what would it take for it to start falling?

Brief 🧵 based on new analysis out today: ifs.org.uk/articles/nhs-n… Back in February, we produced a set of projections for how the waiting list might evolve under various scenarios.

How did we do? On the face of it, not too bad: our ‘central’ scenario (yellow line) has done a decent job of tracking the actual data (blue line).

Today, we publish the 2022 edition of @TheIFS Green Budget, which provides in-depth analysis of the key challenges and trade-offs facing the Chancellor.

ifs.org.uk/collections/if…

As one of the editors, I obviously think you should read it in full. But here's some highlights: The core conclusion is that, under a central forecast, the Chancellor would need to announce a fiscal tightening of > £60 billion to stabilise debt as a fraction of national income in the fifth year of the forecast. The precise figure is uncertain; the broad conclusion is not.

Is there a way to ease some of the recruitment difficulties in the public sector, and make (most) public sector employees happier, without changing the generosity of their pay package, and without costing the government a penny?

We think there might be! A long 🧵 based on 👇

https://twitter.com/TheIFS/status/1578640083158179850

Before I get to the punchline, here's some key background to explain how we get there.

Let's start by looking at pay in the public sector (excluding pensions for now - I'll come back to that) and, in particular, how it compares to pay in the private sector.

New analysis for the BBC shows record numbers of nurses quitting the NHS.

But what impact do nurse shortages have, and what benefit would extra nurses bring? We've got some timely new research which looks at precisely these questions. 🧵

bbc.co.uk/news/health-63… By we, I mean a crack team of researchers from @TheIFS, @HealthFdn, @ImperialBiz , @KingsNursing , and @ImperialNHS.

We've looked at the link between nurse staffing and patient outcomes in the English NHS; the full @BMJ_Qual_Saf paper is here:

qualitysafety.bmj.com/content/early/…

I think the Chancellor has backed himself into a corner. He announced permanent tax cuts, with no hint of any spending cuts to offset these, without any independent scrutiny from the OBR, and without even a half-hearted attempt to show how the public finance numbers might add up. The plan - it seems - was to single-mindedly pursue higher growth, cut taxes, leave spending plans unchanged, and if that meant higher borrowing and debt, so be it.

During the leadership campaign, Liz Truss promised to reverse the recent increase in National Insurance Contributions (NICs). That's widely expected to be announced on Friday in the mini-Budget.

But there's one key question on the NICs cut I've yet to see answered. 🧵 Pre-warning: this is probably one for the enthusiasts and fiscal nerds. But the specifics here have the potential to matter a lot for the NHS, schools, and other public services.

The Chancellor is expected to announce a large package of permanent tax cuts on Friday without a new set of forecasts from the OBR. This is disappointing.

So, in the absence of official scrutiny from the OBR, we @TheIFS have stepped into the breach. 🧵 In short, the government is planning a substantial package of permanent tax cuts that will mean a sharp and sustained increase in borrowing, just as borrowing becomes more expensive, in a gamble on growth that may not pay off. You can't assume your way to fiscal sustainability.

We’ve heard a lot from the Conservative leadership candidates about their plans for tax cuts.

We’ve heard much less about their vision for public spending. In the meantime, inflation is squeezing public service budgets as we head towards a difficult winter. A long-ish thread: The UK economy is under the cosh. Under the Bank of England’s latest forecasts, we are set to experience both a recession and an extended period of high inflation. That poses serious challenges to households, businesses and policymakers (including the next prime minister).

A few thoughts on Liz Truss' proposal for regional public sector pay deals, which she claims could eventually save up to £8.8 billion per year. 🧵

ft.com/content/0487b6… The short version: regional pay deals aren't a crazy idea (both Brown and Osborne flirted with the idea), but tricky to implement. And we should be clear about where the proposed savings would come from: pay cuts for public sector workers outside of London and the South East.

Sunak's income tax proposals mean that the candidates' tax plans are increasingly similar, particularly on personal taxes. The big differences are in overall scale and timing, and over how best to use the tax system to boost business investment. [1/6]

ifs.org.uk/publications/1… Even on personal taxes, though, there are a few key differences, because Truss wants to cut national insurance contributions (or undo a recent rise, if you prefer that framing) while Sunak wants to cut income tax. These differences are spelled out here. [2/6]

Big arguments over public sector pay deals later this year are inevitable. Money is tight, so where should pay awards be targeted?

Some new thoughts from me, inspired by and based around this chart. A long thread... 🧵

ifs.org.uk/publications/1… Quick summary: (1) with money tight, clear temptation to target pay awards at the low-paid on cost of living grounds, but (2) public sector pay is a very blunt tool for this task, and (3) further compressing pay scales isn't risk free and could threaten public service delivery.

I'm increasingly convinced that the GDP deflator (which underlies official calculations of how generous government spending plans are) isn't a helpful way of looking at the cost pressures on public services this year.

This is nerdy, but important. A thread 🧵 [1/13] Under @OBR_UK's latest forecasts the GDP deflator is forecast grow by just 2.8% in 2022, vs 7.4% growth in CPI. Why? In part, because the government consumption deflator is forecast to be negative (i.e. the price of buying public services is forecast to FALL) [2/13]