IFS analysis for the 2017 general election

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IFS researchers presented analysis of the manifestos at a briefing on Friday 26 May. Presentations compared the  parties' plans on public spending, the public finances  and reforms to taxes and benefits. The briefing was live-streamed and a recording will be posted shortly.

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In this observation, we examine the main parties’ proposals for spending on 16-18 education in England, which includes students in School Sixth Forms, Sixth Form Colleges and Further Education Colleges. This area of education receives considerably less attention in public debate than other areas and seems not to have been a major spending priority for policymakers over recent decades.

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On 30 May the SNP published their manifesto for the upcoming UK parliamentary elections. In this context, this observation examines the state of Scotland’s underlying public finances and how they might evolve over the next few years given current economic forecasts.

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The Conservative, Labour and Liberal Democrat manifestos all contained commitments to increase NHS spending over the next parliament. In this observation we set out what these commitments are likely to mean for the path of health spending in England going forwards, and put this in the context of the pressures faced by the health service from an ageing population.

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In this observation, we detail what the commitments outlined in the Conservative, Labour and Liberal Democrat manifestos on education spending would mean for the path of overall school spending in England and the prospects for continued reform of the school funding system.

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Yesterday, the Conservative Party proposed changes to the rules governing who is eligible for government funding for social care, and backed away from a lifetime cap on care costs. In this observation, we discuss those changes and lay out their potential effects.

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Recruitment and retention problems are beginning to emerge in the public sector following successive years of public pay restraint. The main parties’ plans for future public sector pay settlements differ significantly.  A new IFS briefing note analyses the Conservative, Labour and Liberal Democrat plans for public sector pay, and what the implications of their policies are for the public sector.

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In a comment piece in The Times, IFS Director Paul Johnson reflects on the Conservative and Labour manifestos.

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Today’s Conservative manifesto announced that from 2020 onwards the state pension would be increased over time in line with average earnings or inflation whichever is highest – the so-called ‘Double Lock’. In this observation we show that this is very similar to sticking with the Triple Lock, and does little to resolve the pressures an ageing population will put on the public finances over the years to come.

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Childcare and early years provision has become an important area of debate in this election, with both the Labour party and the Liberal Democrats promising to substantially extend eligibility for free childcare.This Observation looks and the possible impact and cost of the Labour and Liberal Democrat proposals.

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The Liberal Democrat manifesto published today includes commitments to increase all rates of income tax by 1 percentage point as well as cancelling a number of significant benefit cuts and reversing others. In this observation we provide an overview of these proposals and compare them to the income tax and benefit proposals published by Labour yesterday.

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Today the Labour Party has announced that if elected it would introduce a 45% income tax rate on incomes over £80,000, and a 50% rate on incomes over £123,000. A new IFS Briefing Note analyses the impact of this proposal if it were introduced UK-wide immediately.

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This briefing note provides background information on the police service in England and Wales.  It details recent changes in police numbers and in police funding, and examines some indicators of police performance in the light of these changes. It also considers briefly the Labour Party’s proposal to increase the number of police officers.

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In a new comment piece for The Times, IFS Director Paul Johnson says what we really need is an honest debate about tax.

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The UK population is ageing rapidly. This ageing of the population puts pressure on public spending because older individuals receive state pensions and they are more likely to use relatively expensive health and social care. This briefing note sets out the trade-offs that this presents for the public finances.

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Yesterday’s leaked Labour manifesto included a commitment to scrap tuition fees. This follows their previously announced plans to bring back maintenance grants for the poorest students. Both would represent a major reversal of the last 20 years of Higher Education (HE) policy. These proposals increase the upfront government contribution to HE by £1 billion compared to the current system. However, these policies would increase the government deficit by around £12.7 billion, of which £11 billion is from scrapping fees, because loans made to students don’t add to the deficit. The forecast long-run cost is lower, at around £8 billion, because a significant proportion of student loans are not expected to be repaid. In this observation, we highlight the expected short-run impact on the public finances, the impact on graduates and the wider policy implications. We focus on the impact in England because Higher Education is devolved; however, the Barnett formula would add to the cost of this policy.

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The Conservative and Labour parties are both proposing dramatic increases of the minimum wage. The proportion of employees aged 25 and over paid the National Minimum Wage has already doubled from 4% to 8% and will rise to 12% under Conservative plans. Under Labour party plans (to raise the minimum to £10 an hour by 2020) 22% of employees aged 25+ and more than a quarter of private sector employees aged 25+ would be paid at the minimum.

This observation looks at the possible benefits and risks of a large and sudden increase of the minimum wage for employees, consumers and businesses.

 

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Labour plan to spend significant amounts of additional money on education as compared with current government plans, about £8.4 billion a year in today's prices by 2021–22 (or £9 billion in cash-terms). About £4.8 billion of this £8.4 billion will go to schools, whilst the rest will go towards bringing back the Education Maintenance Allowance, maintenance grants and abolishing fees for adult education courses. In this observation IFS researchers detail the education spending commitments and compares them to existing government plans.

The Labour party plan to fund the education measures by increasing the main rate of corporation tax from 19% today to 26% by 2020–21. This would be the first time the main rate of the modern corporation tax in the UK had been increased. This observation sets out what this change would mean and the trade-offs it would involve.


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The Labour party has promised to introduce free school meals for all primary school children, claiming that universal free lunches would remove stigma and ‘benefit the educational attainment and health of all children’. Previous IFS research concludes that providing school meals free of cost to all primary students can boost attainment by the equivalent of two months’ progress over two years, a meaningful effect. However, the costs of this policy are substantial – around £950 million a year – and the benefits from extending it nationwide might be smaller than found in the pilot study. In the context of constrained public spending and alternative programmes such as breakfast clubs that deliver similar gains at much lower cost, policymakers should think carefully about whether this is the best use of resources.

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A new IFS briefing note, released today as part of its pre-election analysis, provides key information on UK aid spending.

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It is also often unclear from politicians’ statements how much wealth or income one should have to qualify as being rich. What might they have in mind?

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A new IFS Briefing Note provides key information on incomes and inequality. It analyses net household incomes (after taxes and benefits) since the recession, and looks ahead to what we might expect over the next parliament, if official economic forecasts turn out to be right and the new government sticks to current tax and benefit plans.

UK health spending

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This briefing note analyses how UK public spending on health has changed over time, and both the short- and long-run pressures faced by the health service. 

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This briefing note describes how local authority spending on adult social care has evolved since 2000-01, what could happen to spending under current plans, and the challenges faced by social care in the long run.

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A new report on the evolution of the public finances since the financial crisis shows that the deficit is roughly back to the level it was prior to the financial crisis, although still above its long-run average. The latest official forecasts suggest that borrowing is on course to be roughly in line with our assessment of what it would have been under Labour’s 2015 plans, and significantly above that implied by the commitments made in the Conservative Party 2015 manifesto.

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This briefing note examines how much revenue is raised from different taxes, how this has changed since 2010 and what challenges will be faced by a future government.

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This briefing note provides key information on the UK labour market in recent years, and summarises the challenges in the labour market facing the next government. It uses up-to-date data to understand how the labour market has performed and how it might evolve. 

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This briefing note analyses the impact of tax and benefit changes since May 2015 on the incomes of different kinds of households. We look both at reforms already implemented, and those planned by the current government. 

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There has been significant speculation about whether the Conservative manifesto will pledge to maintain the ‘triple lock’ on the basic state pension guaranteeing that the annual rise will be the highest of inflation, average earnings growth and 2.5%. In this observation we discuss the problems with the triple lock, along with alternatives.

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In this observation, we set out what current government plans imply for spending on schools in England, what each of the main parties has said to date and the potential implications of freezing school spending in real-terms after the election. 

 

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IFS Deputy Director Carl Emmerson examines the UK public finances in a short explainer video.

 

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General elections ought to be moments for confronting difficult choices. We face more than our fair share of those at the moment, but we must not let the inevitable focus on Brexit blind us to some of the other choices we face. At the heart of those choices is one over the size and the shape of the state that we want, and how to pay for it. This is a question which politicians always duck. Collectively we can’t keep on avoiding it.

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Andrew Hood explores intergenerational inequality through 7 key charts. Featured on BBC website. 

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This explainer video outlines the sources of tax revenue.

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What are National Insurance Contributions (NICs)? Helen Miller, Associate Director at the Institute for Fiscal Studies, explains.

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IFS researcher, Andrew Hood, looks at what is happening to spending in the National Health Service.