The devolved governments – particularly Scotland’s – may soon find themselves raising and keeping more of their own tax revenues. But the Barnett formula, which aims at providing the same pounds-per-person change in funding for the devolved governments as is the case in England, looks set to stay in place. A new IFS report, funded by the ESRC, looks at how the Barnett formula interacts with business rates (a tax that is already fully devolved to Scotland and Northern Ireland), and the lessons that can be learned for further tax devolution. It finds there are flaws that need to be avoided when additional taxes are devolved.Find out more
What is welfare spending?
The government has started to send out information on how tax revenue is spent to individuals who pay income tax or National Insurance contributions. It has broken down spending into a number of categories. The biggest of these is "welfare", which represents a quarter of total spending. State pensions also appear as a separate category, accounting for 12% of spending. In this observation we look at what counts as pension and welfare spending, and offer some alternative breakdowns.Find out more
Half way there?
The Prime Minister, in a Times article, said “In this parliament we will have made £100 billion of savings while cutting income tax by £10.5 billion. In the next parliament we plan to make £25 billion of savings while making £7.2 billion of income tax cuts”. This repeats a statement made at this year’s Conservative Party conference. The implication is that most of the planned cuts in public spending have been made and that the promised tax cuts in the next parliament are relatively modest by comparison. Carl Emmerson and Paul Johnson explain what these numbers mean and question whether it is sensible to compare them at all.Find out more