Budget Briefing: The Age of the Super-State • Just three years ago, the Centre for Policy Studies warned that Britain was set to enter the age of the trillion-pound state, with public spending passing the £1 trillion mark for the first time. [...] Favouring the Public Sector over the Private Sector, and Central Planning over Markets The Budget tilted the balance further towards the public sector, and away from the private. [...] Predictably, the OBR reports that the economic boost from higher government spending will fade by the end of the five-year forecast period, and given the negative impact of both the NIC rise and crowding out of business investment – equivalent to 0.17% of GDP after five years – the overall effect of the Budget turns negative before 2030. [...] A Health Service with a Nuclear Deterrent The NHS received the bulk of the extra money raised by the Chancellor, to the point where the health budget is now roughly equivalent to the entire GDP of countries such as New Zealand or Greece. [...] Family Unfriendly The Budget continued the recent approach of neglecting the interests of the family in the tax system, and stoking demand for childcare rather than properly reforming the market.
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Table of Contents
- The Big Picture Stagnation Follows Stagnation 2
- Sources OBR BoE 2
- 1839 2
- 1909 2
- 1979 2
- Taxes as a share of GDP 2
- Sources OBR ONS 3
- 5000 3
- 15000 3
- 1980 3
- 1996 3
- 2012 3
- 2028 3
- GDP per capita 3
- Source OBR 4
- 1.4 4
- 2001-02 4
- Total managed expenditure 4
- Taxes on Jobs and Investment 5
- Source OBR 6
- Costing of behavioural changes due to rise in employer NICs 6
- Favouring the Public Sector over the Private Sector and Central Planning over Markets 7
- The Budget tilted the balance further towards the public sector and away from the private. 7
- Source OBR 8
- More Welfare Less Work 8
- Despite talk of a focus on economic inactivity and welfare reform there was very little in the Budget to encourage people back into work and a great deal to discourage it. 8
- 0.2 8
- Policy impacts on real GDP by measure 8
- Source OBR 9
- 62.2 9
- 64.4 9
- Adult economic participation rate 9
- A Health Service with a Nuclear Deterrent 10
- The NHS received the bulk of the extra money raised by the Chancellor to the point where the health budget is now roughly equivalent to the entire GDP of countries such as New Zealand or Greece. 10
- An Innovation Nation 10
- The Chancellor displayed a welcome focus on supporting innovation but kept to the recent Conservative approach of picking winners from on high. 10
- Family Unfriendly 11
- The Budget continued the recent approach of neglecting the interests of the family in the tax system and stoking demand for childcare rather than properly reforming the market. 11
- Living Standards Squeezed Again 12
- The OBR predicts more cost of living pressures not least due to businesses passing on the costs of tax rises. Meanwhile higher employment costs will hit young people and low earners. 12
- Source OBR Labour appears entirely happy to kill off the North Sea but it is Britains energy security that will suffer. 13
- Eroding Energy Security 13
- 22.0 13
- Real household disposable income per person 13
- Housing to the Rescue 14
- Labour have made the right noises on housing and planning but as elsewhere they are too focused on the public sector and not enough on the private including effectively killing off Right to Buy. 14
