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Public spending

Briefing note
As in previous general elections, the appropriate size of the state is a key issue. This Briefing Note describes the trends in public spending since Labour came to office in 1997 and compares them with those seen previously in the UK and in other OCED countries.

  • In its first three years in office, Labour saw public spending drop to a 39-year low as a share of national income, since when it has risen sharply. The overall increase in public spending seen between 1997 and 2005 is the 2nd largest among the OECD countries on which we have comparable information. But even the increases planned by Labour through to March 2008 would still leave the state spending a smaller share of national income than it did in the early 1990s.
  • Public spending on the NHS, transport and education has increased much faster since Labour came to power than it did during the Conservatives' 18 years in office. By historical standards, spending in these areas has grown particularly quickly during Labour's second term in office.
  • The period from April 1999 to date represents the largest sustained increase in spending on the NHS since its inception. This has meant that the Prime Minister's pledge to bring health spending up to the EU average has been met, if the benchmark is the simple average of EU health spending in 1998. However, UK health spending in 2005ְ6 is likely to be below the more meaningful weighted average of health spending among other EU countries in 1998, let alone what they have spent on healthcare more recently.