State crafting: Changes and challenges for managing the public finances

Presentation at Resolution Foundation event putting the public finances into context ahead of the next election.

17. Resolution
Foundation

Nuffield
Foundation

So, the real debate is how to manage wider fiscal pressures

・ Taxes often rise after an election, and an incoming
government may choose to reprioritise existing spending
plans.

Other options from the wider fiscal debate include:

・ Tweaking the fiscal rules to move from net debt ‘excluding
the Bank of England’ to total debt (worth £16 billion in 2028-
29).

・ Asking the Bank of England to move to a system of ‘tiered’
reserves remuneration (worth £8 billion in 2028-29).

18. Resolution
Foundation

Summary:

・ Much of the debate in the election campaign has focussed on | 后 rs
policies being announced, rather than the likely much larger
wider fiscal pressures the next government may face.

・ The next government faces a difficult fiscal inheritance, which
could become much worse if potential bad news crystallises.

・ And if challenging departmental cuts remain undelivered, the
next government could face an over £30 billion ‘black hole’ in
the public finances.

・ There are options open to a future government to deal with
these pressures, but this is likely to involve difficult choices.