Max Warner

On the question of one vs two OBR forecasts per year...

The IMF said first best option would be to operate with more ‘headroom’. They did not call for one forecast. They suggested that the rules could be assessed only once per year, but explicitly said that two forecasts per year is best practice!

NEW PODCAST: The end of the peace dividend? UK defence in a changing world

🎧 @helenmiller.bsky.social, @maxwarner.bsky.social & @rusi.bsky.social's Matthew Savill chat all things defence spending: what it covers, how it's changed and what reaching 3.5% of GDP would mean: ifs.org.uk/articles/end...

One of my favourite charts from our new report on defence spending:

For decades, the 'peace dividend' of falling defence spending as a share of GDP has allowed more spending on things like health without such a big rise in the size of the state. That is no longer the case

In new @theifs.bsky.social work, we examine the fiscal challenge of the UK's commitment to higher defence spending. If met, for the first time in a long time health and defence spending would likely rise simultaneously (as a % of GDP). This would change the shape and/or size of the state.

Some great charts in this report. This one is my favourite. The UK has signed up the new NATO commitment to spend 3.5% of GDP on defence. The scale of the increase is fiscally challenging, and we've given ourselves a decade. Poland, on the other hand, has done it in just two years.

We have a new @theifs.bsky.social report out today on UK defence spending. Defence spending commitments, if met, will have a large impact on the shape and/or size of the state. We cover lots of important aspects of defence spending, including international comparisons and impacts on growth

We have a new @theifs.bsky.social report out today looking at the government's ambitious plans for public sector productivity. If productivity growth disappoints, the govt will have to choose between worse public service performance than planned or topping up budgets

How ambitious are the government's plans for public sector productivity? | Institute for Fiscal Studies This event will present new analysis on the current government's plans for improving public sector productivity, with a response from Jeremy Hunt MP.

A key factor at the next election will be the state of Britain's public services. That will depend on whether the government can make those services more productive, to deliver more without huge cash injections.

Join our @theifs.bsky.social event on Friday to hear more: ifs.org.uk/events/how-a...

How ambitious are the government's plans for public sector productivity? | Institute for Fiscal Studies This event will present new analysis on the current government's plans for improving public sector productivity, with a response from Jeremy Hunt MP.

Govt plans for public service spending and performance rely on ambitious productivity plans. Next Friday we have an @theifs.bsky.social online event looking at these plans and their implications, with new analysis from us and reflections from @jeremyhuntmp.bsky.social.
ifs.org.uk/events/how-a...

When and how should the government protect existing claimants from benefit cuts? | Institute for Fiscal Studies Important trade-offs are involved when designing transitional protections for benefit cuts.

When and how should the government protect existing claimants from benefit cuts?

@eduinlatimer.bsky.social and @matthewoulton.bsky.social discuss trade-offs involved when designing transitional protections for benefit cuts & what it means for recent benefit reforms:

ifs.org.uk/articles/whe...

The merits of student loan forgiveness and pension changes for resident doctors | Institute for Fiscal Studies The government is reportedly considering changing student loans and pensions for resident doctors. We consider the merits of potential changes.

This is with my excellent colleagues Kate Ogden (expert on student finance) and @laurenceobrien.bsky.social
(expert on pensions). Read the full piece, with lots more detail and discussion, here: ifs.org.uk/articles/mer...

There are reports that the government is considering changing student loans or pensions for resident doctors. We've written a new @theifs.bsky.social comment on the potential merits of such changes. Here's a summary:

@benzaranko.bsky.social and I have a new paper out in the Oxford Review of Economic Policy on the future of health and social care provision in the UK. It sets out the challenges and opportunities for increasing inputs and productivity in the NHS and adult social care in the coming decades

NEW: A response to government commitment to spend 5% of GDP on national security

@beeboileau.bsky.social‬ and @maxwarner.bsky.social‬ set out what this could mean for government spending and future fiscal events: ifs.org.uk/articles/res...

Spending on the new childcare entitlements next year could be £1bn higher than initially forecast in March 2023 - a 25% increase.

So what's going on? I break down the numbers that @pjtheeconomist.bsky.social and @maxwarner.bsky.social set out in @theifs.bsky.social post-Spending Review briefing.

Great work from my colleagues out today on Crown Court productivity. A relatively good news story for broader public sector productivity, with complexity adjusted Crown Court productivity appearing to have returned to pre-pandemic levels

We're now just under a week away from the Spending Review, the first multi-year spending review since 2021.

Sign up for our post-Review analysis the morning after at 10:30am: ifs.org.uk/events/spend...

This is a key point from our pre Spending Review report. Increasing NHS capital spending implies cuts to capital spending on other areas, e.g. transport, schools or net zero, given defence plans. Seems unlikely the NHS will see a large increase in capital spending at the SR.

In summary, given the size of health spending and the slow growth in planned overall spending, the government faces a really challenging and important trade-off at the Spending Review between increasing health spending and increasing spending on everything else. 12/12

3.4% per year is of course not the upper limit of what DHSC might want, or what might be needed to achieve the govt’s NHS objectives – but faster growth (or any further defence increases) mean there is even less for other areas within the current plans for total spending. 11/12

Such growth rates would probably be sufficient to improve NHS performance – particularly with improvements in productivity. But they would imply substantial squeezes on other public services, where the govt also wants to improve performance. 10/12

Chart showing the trade-off between DHSC spending growth and spending growth for all other areas

After defence commitments and the Barnett formula, giving DHSC 2.5% per year in real-terms would leave no real-terms increases for other areas. 3.4% per year for DHSC (closer to the long-run average) would imply 1% cuts per year in real-terms for everything else. 9/12

But giving health anything above this has massive implications for spending on everything else. That’s because DHSC makes up around 40% of total day-to-day spending by public services. 8/12

Giving health a 1.2% annual real-terms increase (the same as the overall envelope) would be very challenging for the NHS. It would be a third of the long-run average health spending growth, and only slightly higher than seen under the coalition government in 09-10 to 14-15. 7/12

The key question is whether the government sticks to this new pattern, or returns to the traditional pattern. This time the envelope for total spending is growing relatively slowly – at an average of 1.2% per year in real-terms for day-to-day spending. 6/12

But in recent years, including the Spending Review last year, that pattern has changed. Last year the government gave health close to the average real-terms annual increase in day-to-day spending – health was no longer such a clear winner. 5/12

Chart showing that the NHS has traditionally received faster planned spending growth than planned total spending growth at Spending Reviews

If we look at past Spending Reviews, health has long done well – between SR 1998 and SR 2015, on average, the day-to-day health budget was planned to grow at 3.5% per year, while the overall day-to-day budget was planned to grow at 1.5% per year. 4/12

There is no objective level of funding growth that the NHS ‘needs’. The funding the NHS receives will determine the types and quality of services it provides, but these are political decisions, and up to the government to decide. 3/13

At the Spending Review, the government will set 3 years of day-to-day budgets and 4 years of capital budgets for the Department of Health and Social Care (DHSC), almost all of which will be spent on the NHS in England. 2/12

We have a new IFS report out on the key decisions for the govt at the upcoming Spending Review. A short thread on what the Spending Review could mean for health spending – and why health spending matters so much for everything else. 1/12