ICAEW chart of the week – public spending

Ross Campbell, Director for the Public Sector for the ICAEW, writes:

“With the budget rapidly approaching this week’s chart sets out the main components of planned public spending this year. Just over half (53%) is planned to go on the “welfare state”, comprising health and social care as well as pensions and welfare benefits.

With interest taking a further 6%, that leaves £330bn or 41% of the total to spend on delivering public services.

With an estimated population of just over 66 million people living in the UK, the total planned spending of £802bn in 2017/18 is equivalent to approximately £1,010 per person per month – the first time monthly spending has exceeded £1,000 per head.

The Chancellor approaches the Autumn Budget in a difficult position. There are requests for additional resources from the NHS, for social care, for the roll-out of Universal Benefit, for schools and colleges, for the armed forces, for roads and rail, for housing and for the police and border control.  Combined with higher interest costs as interest rates and inflation rise, this means that spending is likely to rise.

He may have some room for manoeuvre for the rest of the current financial year, as tax revenues appear to be holding up and costs remain relatively under control so far. However, constraining spending growth in future years is probably going to be harder. For example, the Spring Budget envisaged total spending in 2018-19 of £817bn, an increase of just 1.8% compared with this year. With inflation now running at 3% and so many pressures on spending to contend with, this particular number will be one to watch when we get to the Autumn Budget.”

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