Category Archives: Institute for Fiscal Studies

UK politics: Sunak refuses to say how abolition of national insurance would be funded – as it happened

Posted on by

PM says ‘people trust me on these things’ and refuses to be drawn on whether government would forgo entire £46bn raised from measure

Keir Starmer has accused Jeremy Hunt of repeating the budget mistakes made by Liz Truss during her disastrous premiership.

In comments on the budget during a visit to a building site this morning, Starmer focused on Hunt’s proposal to abolish employees’ national insurance over time, saying that this was a bigger unfunded tax promise than those in Truss’s mini-budget. (See 9.28am.)

How humiliating was that for the government yesterday?

We’ve argued for years that they should get rid of the non-dom tax status, they’ve resisted that. And now, completely out of ideas, the only decent policy they’ve got is the one that they’ve lifted from us.

Nothing that Jeremy Hunt did yesterday, nor anything the OBR said, changes anything very significantly. Which is a shame. Because that means we are still:

-heading for a parliament in which people will on average be worse off at the end than at the start,

Continue reading...

NHS waiting lists falling but will stay above pre-Covid levels until 2030, IFS says

Posted on by

Length of time patients must wait for A&E care, diagnostic tests, cancer care and surgery will remain high, report predicts

The NHS hospital waiting list will be falling “consistently” by the time of the general election but will remain even larger than it was before Covid until 2030, a new report predicts.

In potentially good news for Rishi Sunak, the Institute for Fiscal Studies (IFS) said the waiting list for operations in England is expected to “start to fall consistently but slowly from the middle of 2024”, during the months leading up to the election, which is widely expected in November.

Continue reading...

Rishi Sunak says his ‘working assumption’ is that general election will take place in second half of 2024 – UK politics live

Posted on by

PM appears to rule out spring election after recent speculation it could be held in May

Starmer says being in opposition is frustrating, and he accuses the Tories of treating it as performance art.

He is now on the passage about his career in public service that was posted earlier. See 9.12am.

If you’ve been breaking your back to keep trading, steering your business through the pandemic, the cost-of-living crisis, the challenge of Brexit and the chaos of Westminster.

If you’ve been serving our country, whether in scrubs or the uniform of your regiment and what you want now is a politics that serves you, then make no mistake - this is your year.

Continue reading...

OBR halves UK growth forecast and warns inflation will exceed 2% target until 2025

Posted on by

Despite £27bn windfall for the autumn statement, government forecaster warns of generally more difficult outlook until 2028

The government’s official forecaster has slashed its predictions for economic growth over the next two years, and warned that inflation could take until 2025 to come back to the official 2% target.

In an updated financial health check to accompany the autumn statement, the Office for Budget Responsibility (OBR) said a more resilient economy this year had handed the chancellor a £27bn budget windfall, but it warned of a more difficult outlook up to 2028 than previously forecast at the time of the budget in March.

Continue reading...

Jeremy Hunt faces red wall revolt if he delivers ‘a budget for the rich’

Posted on by

The chancellor’s potential inheritance tax cut in Wednesday’s budget would aid millionaires amid a cost of living crisis

Jeremy Hunt faces a backlash from “red wall” Tory MPs if he uses a fiscal windfall of up to £20bn to deliver tax cuts for the rich rather than to help ordinary families with the cost of living, the Observer has been told.

The chancellor and Rishi Sunak are this weekend finalising an autumn statement on Wednesday that could include a major reduction in inheritance tax – four-fifths of which would benefit those with more than £1m at their death, according to a new report from the Institute for Fiscal Studies (IFS). Each person with more than £1m would receive an average tax cut of £180,000, the IFS states.

Continue reading...

Tories have no room for tax cuts despite £52bn a year stealth rise, says IFS

Posted on by

UK stuck between weak economic growth and risk of persistently high inflation, says thinktank

The government has no room for unfunded pre-election tax cuts despite having pushed through a “colossal” £52bn a year stealth raid on household incomes on Rishi Sunak’s watch, the Institute for Fiscal Studies has warned.

Britain’s foremost economics thinktank said the dire state of the public finances meant that attention-grabbing tax cuts risked stoking inflation, leading to higher Bank of England interest rates and a lengthy recession.

Continue reading...

Scrapping inheritance tax would cost £15bn a year by 2032, says IFS

Posted on by

Thinktank carried out analysis as calls mount among Tory MPs for the tax to be abolished

Scrapping inheritance tax would cost the government almost £15bn a year in lost revenue by 2032, according to analysis by the Institute for Fiscal Studies that follows calls from Tory MPs for the main tax on inherited wealth to be abolished.

The thinktank said the latest figures from HMRC showed fewer than 4% of estates paid inheritance tax (IHT) in 2020–21, but the rapid growth in wealth among older individuals meant this number was set to rise to more than 7% over the next decade.

Continue reading...

HS2 may end up as ‘total waste of money’, warns IFS thinktank – UK politics live

Posted on by

Comments from Paul Johnson of Institute of Fiscal Studies come as Downing Street hints at delay to work on second phase of rail link

Around 20,000 university workers are out on strike this week at more than 50 universities across the UK, despite a dramatic last-minute scaling back of industrial action.

Strikes had been set to go ahead at 142 UK universities this week as part of a long-running dispute over pay and working conditions, but it emerged last week that two thirds of branches of the University and College Union (UCU) had declined to take part.

Davey said the Lib Dem commitment – dating back to 1992 – to raise income tax by 1p to improve public services is unsustainable in the current economic climate. Originally the money raised was earmarked for education, but at the last election the party said it would use it to fund the NHS.

Speaking from Bournemouth to broadcast studios, Davey suggested the burden should instead fall on companies making “huge profits” while people struggle with the cost of living.

Continue reading...

Scottish public spending deficit falls as oil revenues hit record high

Posted on by

Both sides of constitutional debate use Gers data to argue case for and against independence

Scotland’s public spending deficit has fallen from a record peak last year, as oil and gas revenues reached their highest-ever level after a global rise in oil prices.

The government expenditure and revenue Scotland (Gers) report calculated a per-person deficit – the gap between the amount raised through all tax and spending on all public services – as £1,521 in the 2022-23 financial year, down from £2,184 the previous year.

Continue reading...

Tax cuts would put ‘scary’ UK finances in greater danger, warns top economist

Posted on by

Paul Johnson, of the Institute for Fiscal Studies, issues plea for honesty from Labour and the Conservatives about tax and spending choices ahead of election

Unveiling significant tax cuts before next year’s general election would put Britain’s “scary” public finances in further peril and risk the nightmare scenario of even higher interest rates, one of the country’s most influential economists has said.

Paul Johnson, director of the Institute for Fiscal Studies, also made a plea for honesty from both main parties over the profound tax and spending choices they would face should they win power.

Continue reading...

Jeremy Hunt is helping rich instead of helping people into work, says thinktank

Posted on by

IFS says budget pensions giveaway could open up loophole for avoidance of inheritance tax

Jeremy Hunt’s huge pensions giveaway for the wealthiest 1% may have no impact on increasing the number of people in work, while opening a loophole for avoidance of inheritance tax, a leading economic thinktank has warned.

The Institute for Fiscal Studies said the surprise measure in the chancellor’s budget “probably won’t play a big part, if any” in increasing the number of people in work.

Continue reading...

No 10 refuses to deny Sunak was given informal warning about Raab’s behaviour before he made him deputy PM – live

Posted on by

Dominic Raab under increasing pressure as civil servants’ union calls for him to be suspended until bullying inquiry concludes

MPs have been told that paramilitary groups in Northern Ireland have coerced young people with drug debts to take part in rioting, PA Media reports. PA says:

A community worker gave an example of a user’s debt being reduced by £80 for doing so.

Megan Phair, coordinator of the Journey to Empowerment Programme and member of the Stop Attacks Forum, said both loyalist and dissident republican groups use the tactic to force people on to the streets.

It’s time for the prime minister to come out of hiding and face the music. The public deserves to know the truth about what he knew and when, including the full disclosure of any advice given to him by the Cabinet Office.

Continue reading...

How the autumn statement brought back the ‘squeezed middle’

Posted on by

IFS and Resolution Foundation say Jeremy Hunt’s policies will shock middle England, with higher taxes here to stay


Traditionally elections in Britain are decided by swing voters in a relatively small number of seats. Parties go to considerable lengths to tailor their policies to the perceived demands of those getting by on average incomes. Pollsters have even coined names for the archetypal electors that need to be wooed: Basildon man and Worcester woman.

So it will be of some concern to government strategists that the post-autumn statement analysis by thinktanks focused heavily on how the measures announced by Jeremy Hunt had an effect on those not particularly poor but not especially rich either. Both the Resolution Foundation and the Institute for Fiscal Studies highlighted the return of the “squeezed middle”.

Continue reading...

Minority ethnic Britons’ educational success not reflected in pay, study finds

Posted on by

‘Clear evidence’ of discrimination in terms of salary and careers despite academic progress, IFS study finds

Most minority ethnic groups in the UK have made remarkable progress in educational achievement but “clear evidence” of discrimination remains in their pay and careers, according to a study published by the Institute for Fiscal Studies.

The IFS report found that most of the largest minority ethnic groups obtain English and maths exam results at least as good or better than those achieved by white British students in England, and are more likely than white teenagers to go on to university.

Continue reading...

Unfunded tax cuts mean UK ‘will need £60bn spending cuts’

Posted on by

IFS says Kwasi Kwarteng’s mini-budget will leave ministers making serious reductions in public services

Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.

The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.

Continue reading...

Public sector job losses could pass 100,000 if government refuses pay rises, says IFS

Posted on by

Chancellor must top up budgets or face industrial action and further recruitment issues, thinktank warns

More than 100,000 public sector workers would lose their jobs this year if the government refuses to fund higher than expected pay awards for nurses, doctors, teachers and care workers, according to the Institute for Fiscal Studies.

The IFS said the chancellor, Kwasi Kwarteng, faced a choice of either topping up public sector budgets or accepting the likelihood of industrial action, further problems recruiting and retaining staff, and a decline in quality of services already under extreme strain.

Continue reading...

IFS: Millions in Britain ‘face stealth tax raid’ under Liz Truss’s plans

Posted on by

For every £1 given workers by cutting tax rates £2 was being taken via freeze on income tax thresholds, thinktank calculates

Millions of households are facing a “stealth” tax raid under Liz Truss’s government despite her promise to support workers through the cost-of-living crisis by lowering their tax bills, Britain’s leading economic thinktank said on Wednesday.

The Institute for Fiscal Studies (IFS) has calculated that for every £1 given to workers by cutting headline tax rates, £2 was being taken away through a freeze on the level at which people begin paying tax on their earnings.

Continue reading...

Kwasi Kwarteng set to address Tory conference with authority on the line after 45% tax rate U-turn – UK politics live

Posted on by

Chancellor expected to give changed address after confirming plan to axe top rate of income tax has been scrapped

Q: Where does this leave your credibility?

Kwarteng says he has been in parliament for 12 years. He says ministers do sometimes change their minds.

I decided, along with the the prime minister, not to proceed [with the policy].

Continue reading...

Mini-budget 2022: pound crashes as chancellor cuts stamp duty and top rate of income tax – live

Posted on by

Tax cuts to cost Treasury around £37bn in 2023-24, official figures reveal

There are no urgent questions in the morning, and so Kwasi Kwarteng, the chancellor, will be delivering his statement soon after 9.30am.

The Commons starts sitting at 9.30am, but they always begin with prayers in private, and so Kwarteng will be up a few minutes later.

The last time they did it one third of the beneficiaries were people buying second homes or buy to let, so we are sceptical that this is the magic bullet to increase homeownership. What we really need to do is to build more houses and to help get people onto the property ladder by increasing the supply of housing.

When this has been done before, it has often fuelled an already hot market and many of the beneficiaries have been people buying a second or third home, rather than the first time buyers that we really want to help who are often trapped in private rented accommodation where they’re paying as much in rent every month as they would in a mortgage.

Continue reading...

Tory leadership hustings – Birmingham: Liz Truss confirms she will allow new grammar schools – as it happened

Posted on by

This live blog is now closed. You can read our latest story on the leadership contest here:

The cross-party Commons Treasury committee has expressed concerns about reports that Liz Truss, the frontrunner in the Tory leadership contest, may hold an emergency budget in September without asking the Office for Budget Responsibility to update its fiscal and economic forecast.

The OBR usually publishes a new forecast alongside a budget, and it provides an independent assessment of what impact the budget measures will have. The system was put in place by George Osborne to discourage the Treasury from making dubious claims about what its tax and spending announcements might be able to achieve.

OBR forecasts provide transparency and reassurance to the markets on the health of the nation’s finances. As a committee, we expect the Treasury to be supporting and enabling the OBR to publish an independent forecast at the time of any significant fiscal event, especially where, unlike other recent fiscal interventions, this might include significant permanent tax cuts.

Whether such an event is actually called a budget or not is immaterial. The reassurance of independent forecasting is vital in these economically turbulent times. To bring in significant tax cuts without a forecast would be ill advised. It is effectively ‘flying blind’.

Continue reading...