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Gordon Brown’s record and challenges for future spending

Gordon Brown’s record and challenges for future spending. Robert Chote, Carl Emmerson, Chris Frayne and Gemma Tetlow Institute for Fiscal Studies. Outline. How does Mr Brown’s bequest compare to the inheritance he received? What plans will he leave for his successor?

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Gordon Brown’s record and challenges for future spending

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  1. Gordon Brown’s record and challenges for future spending Robert Chote, Carl Emmerson, Chris Frayne and Gemma Tetlow Institute for Fiscal Studies

  2. Outline • How does Mr Brown’s bequest compare to the inheritance he received? • What plans will he leave for his successor? • Spending plans for the CSR period look tight • Some difficult trade-offs will be required between spending on health, education and poverty

  3. Brown’s inheritance and bequest

  4. Brown’s inheritance and bequest

  5. International comparison • Many other countries have strengthened their public finances even more • UK still has relatively big structural deficit • UK remains ‘mid-table’ when comparing government debt

  6. How has spending increased? Source: HM Treasury Note: Average annual increase 1996–97 to 2007–08

  7. Why have tax revenues gone up? Note: Increase between 1996–97 and 2007–08

  8. Why have tax revenues gone up? Note: Increase between 1996–97 and 2007–08

  9. Why have tax revenues gone up? Note: Increase between 1996–97 and 2007–08

  10. Why have tax revenues gone up? Note: Increase between 1996–97 and 2007–08

  11. Structural current budget balance: Brown

  12. Structural current budget balance: Brown vs Conservatives

  13. Structural current budget balance: Brown vs Conservatives

  14. The next five years

  15. A challenging spending review?

  16. What might the trade-off be? • Health spending • Wanless Review recommended minimum 4.4% annual growth in spending • Education spending • State school spending per pupil to match that in the private sector in 2005–06 • Child poverty • £4½ billion needed to meet 2010–11 target

  17. What increases might we have? 9 smaller departments Department for Constitutional Affairs Source: HM Treasury ; IFS

  18. What increases might we have? 9 smaller departments Department for Constitutional Affairs Source: HM Treasury ; IFS

  19. A trade-off between health and education?

  20. A trade-off between health and education? Labour to date

  21. A trade-off between health and education? Wanless recommendation = 4.4% Labour to date

  22. A trade-off between health and education? Wanless recommendation = 4.4% Labour to date Expected growth in national income = 2½%

  23. A trade-off between health and education? Wanless recommendation = 4.4% Labour to date Expected growth in national income = 2½%

  24. Conclusions • Public finances in a stronger position that Mr Brown inherited • £20 billion tightening expected over the next five years • £10 billion increase in tax, £10 billion cut in spending • CSR set to be very challenging • Additional money for child poverty to be found later?

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