ELECTION SPECIAL: What you need to know | IFS Zooms In

With an election on the way, we look at the broad economic picture and analyse announcements about the fiscal rules, the triple lock and tax.
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00:00 - Introduction
1:40 - Is there any money to spend?
6:05 - Which fiscal rules bind the parties?
8:25 - The overall tax picture
11:25 - Conservative pledge on personal allowance for pensioners
15:13 - Conservative's 'National Service' plan and how its funded
17:32 - Labour's pledge for new teachers
20:20 - Can you raise money by tackling tax evasion?
27:18 - Improving public sector productivity
30:17 - Spending money outside of the fiscal rules
32:10 - How to understand policy announcements?
38:52 - Paul's final thoughts

[@Hiram8866]

I find these discussions very helpful to understand the election and what both main parties are promising.

[@SGIQ7]

The IFS comments on financial policy rather than advocate specific positions. Well done IFS for shining a light on the Tory government's electoral bribe to pensioners which is fiscally unsustainable. The nation's biggest spend is on the NHS and pensions. Pension spend is not sustainable because tax revenues are not growing fast enough and the birth rate is falling meaning that a shrinking working population will be supporting a larger pensioner group. We therefore need to either extend the pension age or limit the rises in order for the nation to be solvent. On the NHS, we need to focus on healthy living by training doctors in disease prevention. Unless we do that, the NHS will struggle. We need courageous leaders who will take a long term view in the nation's interest.

[@MathewRouge]

The govt is always solvent! it can just print money and spend into the economy provided it doesn't cause inflation. Taxes just reduce the potential for inflation to occur. It is impossible for the government to become insolvent!

[@mattl1421]

Great discussion 👍

[@carpediemcotidiem]

00:01 Government debt should be on a falling trajectory to address bad shocks 02:15 Debt is predicted to fall by a small margin over the next five years with tax increases and spending cuts anticipated 06:37 Both parties have set targets for borrowing and debt reduction in the next Parliament. 08:29 UK taxes are increasing to around 37-38% of GDP 12:30 Discussion on the impact and uncertainty of the triple lock policy on pension allowances 14:11 Tax policy changes and spending plans by the government 17:56 Challenges in recruiting and retaining teachers 19:35 Challenges in public sector pay distribution 22:49 Political parties' spending plans and tax cuts won't significantly impact the overall budget. 24:25 Tax Gap: Diverse reasons and solutions 27:20 Improving productivity in the public sector 28:59 Health Service productivity has declined 32:41 Analyzing the impact of tax policies on growth and redistribution 34:14 Analyzing government priorities and policies 37:33 Assessing the potential impact of party policies on the economy and public finances 39:20 Challenges of current economy and impact on election Crafted by Merlin AI.

[@richardcoppack5357]

With regards to the cost of living crisis and the fact you say it was outside our control due to high energy prices. I remember George Bush proclaiming that the US would become self sufficient in energy so that they were dependent on the Middle East. They did it, we didn't.

[@stumac869]

Thought that a well balanced, fair and very informative debate.

[@philipdurling1964]

Would be interested to hear your views on the financial propositions of smaller parties, like the Lib/Dems, Greens and ReformUK, as well.

[@ThomasBoyd-lo9si]

Great Discussion.

[@JS-vf5gn]

Once again, this was a great discussion. Thanks for letting a layman like me peer behind the curtain of state fiscal policy. The government's current motto is "The cupboards are bare, and we don't care; look, there's a Starmer over there; look, you should all be scared!" The Treasuries treasure trove is playing the game of debt on hard mode.

[@user-uz6dg7zw8n]

We are the only country in the OECD without a tax on owning property. We need to start taxing the ownership of real assets. This could help reduce the burden on residents, tenants, etc… by reducing council tax, while the taxation on property could bring £100 billion into the Treasury.

[@williamknight6527]

Good evening IFS, Gary's economics you tube argues that the main problem in the uk is inequality, impacting housing failing town centres etc. Is this fair and does a focus on growth hide an unequal distribution of the benefits of that growth?

[@FarmerGwyn]

There are very simple answers to the problems we have, NHS needs scanners and we need more home carers, so that patients aren't bed blocking waiting for scans and going home earlier with the right care. Growth is easily achievable by reducing the extreme inequality in this country.

[@jongreenwood3029]

Tax: Istm that Carbon taxes represent a politically acceptable way to raise seed money for public investment - think fuel duty escalator, airplane passenger, vat on gas rather than electricity, also lifestyle taxes, sugar, plastic bottles etc Debt reduction: Financial Repression anybody? Worked in the 50s and 60s

[@SkyEcho7]

👍🏻 Interesting 🍻

[@MathewRouge]

Most of this is nonsense. Uk government debt is a savings account for a lot of uk people. In fact anybody who has a pension scheme will own some of this debt and benefits from debt interest. I thought the IFS would understand this, but it appears they dont understand the fundamentales of how the economy actually works. Happy for a response from the IFS.

[@MARTINA-gc3tq]

And yet they endorse QE ……

[@rickatatastan2695]

Yet again, a supposedly respectable establishment shows fundamental lack of comprehension when it comes to finance. Regarding the Liam Byrne note, Governments never "have" any money, it's always being used to pay off bonds or issue them. That said, inflation burns away national debt, producing leeway for the creation of new debt to replace it. Thus there is always, on average (over hundreds of years), 2% to play with.

[@MathewRouge]

Wrong. The government has money on tap - the BoE can print money at the stroke of a button. The only concern is spending that doesn't cause inflation!

[@l3eatalphal3eatalpha]

Also that note was a running inter party 'joke' for decades and was essentially a tradition.

[@rickatatastan2695]

@@MathewRouge Please permit me to clarify: Issuance of government bonds IS the creation of money (and debt). Thus we are saying the same thing.

[@hughbaker01]

So that's what happened to Alan Partridge@

[@tonylawson9633]

what a great idea, go after the little people who abide by the law...genius!!! what happened to HS2, Universal Credit, err pretty much every project??? tripled in budget...so lets target citizens who spend in the local economy...but wait, I forgot the 4* hotel for immigrants, and the free phones, so they can phone western union and send money out of the UK economy...not to mention the Russia Sanctions, who profits out of sanctions??? I'll give you one guess???

[@RealDareel]

You might as well check out your horoscope as listen to these people

[@crapmalls]

Thanks for blaming ukraine at the start, you saved me 45 minutes

[@petearmstrong2778]

HMRC is linking their IT systems to more sources of revenue which belong to UK taxpayers. Foreign income was done a few years eg hold an account somewhere outside the UK, they match it back to UK taxpayers. This year they are linking to eBay and others where if above £x sales that will link back to HMRC. This process will squeeze more and more like Amazon Marketplace.

[@rogerterry5013]

Nobody is willing to admit that MMT is real and that a Sovereign government has economic power beyond that of the corner shop. Just like Brexit, don’t talk about difficult issues. There is a surplice which corresponds to the deficit.

[@MathewRouge]

Couldn't agree more. The current discourse by politicians (and it appears the IFS) is that the government budget is like that of a household. It is not. The UK has access to as much money as it wants to spends, it is not restricted by taxes or borrowing. THIS IS A NATIONAL SCANDAL that should be fully exposed!

[@ianbanks2844]

Top economists ? Ha ha ha , you academics really do love yourselves so much . I wonder how many top " economists " are multi billionaires . If they are not , why not seeing as how they are , apparently , so brilliant at analysing and predicting " economic " matters As many well known econonmists say these days : the last people that i woukd ask about economics are economists .

[@blairarcher8952]

The super rich dont pay tax

[@JohnSmall314]

We only need to know one thing. Vote the Tories out.

[@1943colin]

If you sincertely wish to get debt under control, you must tax the rich, but we all know that that is unthinkable by the likes of you who insist religiously on making poor people pay.

[@SGIQ7]

It is the government's responsibility to get debt under control not the IFS. IFS is calling out the false claims of no tax rises made by the 2 main parties.

[@MathewRouge]

There's nothing wrong with government debt, it is a saving account for many in this country including pension holders.

[@1943colin]

@@MathewRouge Most of the benefits of debt, if any, go to rich people, not pensioners.