EXPERT HUB – REPORT: Funding fair growth. How to transform the UK economy

by: Inclusive Growth Contributor | on: 10.11.23 | in: Uncategorised

By the Centre for Progressive Policy

CPP’s Funding fair growth report reveals the stark cost of maintaining public services at current levels over the next parliament and sets out how a future government could drive transformative change.

CPP’s analysis shows that the next government will need to spend an additional £142bn per year by 2030 (equivalent to a 1.56% increase in public spending per year) just to maintain current levels of public services. The report models the impact of the UK’s ageing population and price rises on core public services spending, including healthcare, pensions and education.

CPP’s report looks to inject some realism into the debate on the state of the UK’s public finances ahead of the next election.

This report puts forward four solutions to tackle UK’s public spending problem and drive long-term growth across the UK:

• Target £19bn of additional public spending per year on areas proven to have an impact on productivity growth including public health, early years, childcare and adult skills to equip the UK workforce and economy to benefit from the net-zero transition.
  
  
• Reform the UK tax system to fund these investments, including by equalising the rate of capital gains tax with income tax to generate between £10bn and £20bn per year, and by abolishing ineffective tax reliefs such as capital allowances for oil and gas firms, generating an estimated £8bn per year.
  
  
• Reform the UK’s fiscal rules to support borrowing linked to productive long-term investment and spending, and strengthen the OBR to create a stable, trusted platform for better, longer term policy decision making.
  
  
• Hand 2% of income tax to local places to drive growth across the UK, with a proportion of this pooled and redistributed to help tackle chronic inequalities within and between places.

CPP, in partnership with the National Centre for Social Research (NatCen), convened a Citizens’ Jury, reflective of a diverse UK population, to determine which solutions could command broad public support. The vast majority of the jury agreed that government should raise taxes (86%) or increase borrowing (77%) to fund public services like healthcare and education.

Read the full report here.