Latest from IFS: October 2024
Institute For Fiscal Studies
Britain’s leading independent microeconomic research institute
This past month we published?our Green Budget 2024 ?chapter on the pressures on public sector pay ?alongside two comments on?comments on options for increasing taxes and fiscal rules and investment in the upcoming budget . The full Green Budget will be released on Thursday 10 October, you can sign up to launch our event here .?We have?released new reports on the adequacy of future retirement incomes , policies to improve employees' retirement resources and private pensions for the self-employed all of which are?part of our Pensions Review funded by abrdn Financial Fairness Trust. We have also published a report on health-related benefit claims post-pandemic . Our experts have also been giving their analysis of challenges for the?new government in our?IFS Zooms In podcast .
Highlights from the past month are below:
Pressures on public sector pay
Higher-paid public sector workers have fallen down the overall earnings distribution in the last 15 years, and average public sector pay has lagged behind the private sector in recent years. Though each part of the public sector faces its own challenges, recruitment and retention issues loom large.While overall pay rises often make headlines, less focus is placed on the structure of public sector remuneration. Getting this right is also vital for the public finances and for the delivery of public services.
This new chapter from our IFS Green Budget , funded by the Nuffield Foundation and in association with Citi, examines the recruitment and retention challenges facing the public sector.
Fiscal rules and investment in the upcoming Budget
The?government reportedly?wishes to borrow more for investment and will adopt a looser debt target to allow for this within the fiscal rules.
There are a range of options available to the government. No single measure is a perfect indicator of the health of the public finances, and there is not an unambiguously ‘right’ answer. Each possible change to the debt rule has principled arguments for and against. This comment which is?part of this year's IFS Green Budget, considers some of the options available and the key issues and questions at hand in each case.
Promises made by Rachel Reeves limit her room for manoeuvre
In any case none of this fiscal fiddling is of much help to Reeves when it comes to pressures on day-to-day spending. For it is not just her debt rule that constrains. She is also up against it on her pledge to borrow only to invest. However many billions she may “free up” for investment by changing her fiscal rules, she is still likely to have raise taxes if she wants to increase, or even maintain, spending on public services. How much easier, on all fronts, if she had not offered such full-throated support for the ￡20 billion or so of national insurance cuts implemented by her predecessor.
Paul Johnson writes for The Times
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IFS Zooms In Live: How to make your first Budget a success
Wednesday 23 October | 7-8:30 pm | British Library Knowledge Centre, London
Join us for a special in-person recording of an episode of the IFS podcast the week ahead of Rachel Reeves' all-important first Budget. We will look at what can be learned from the best - and worst - Budgets of the past, and what Ms Reeves should be thinking about as she prepares for what could be a defining moment of this parliament.
Pensions Review
In September we published the following reports as part of the Pensions Review, our large multi-year project in partnership with the abrdn Financial Fairness Trust that assesses the consequences of current pension policy, the economic environment, and individual behaviour on future living standards in retirement.
We also released a comment on raising revenue from reforms to pensions taxation .
IFS Zooms In: Are people saving enough into their pensions?
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