The announcement of the budget (to be delivered, unusually, on a Monday, 29th October) has provoked an influx of campaigns on where more taxpayers’ money should best be invested.
While who pays has evolved (4 million lower earners have been taken out of paying income tax altogether and the proportion of income tax paid by the 1 per cent of highest earners now amounts to 27 per cent of the total raised) we are as a country paying close to the highest proportion in tax than ever before in peacetime. Constant economic growth and record employment means that tax receipts have grown consistently.
This, combined with a massive effort by the UK, means that the amount the Government is spending every year above what it raises (excluding capital investment) has been reduced from around £105bn in 2009 to breaking even this year. However our choice as a country significantly to increase public spending rather than reduce the national debt in the boom years of the 2000s and deficits since, have already built up a national debt of £63,000 per household.
We are now, finally, reducing the national debt relative to what the country earns and can look with greater confidence to future spending plans depending, critically, on the shape the Brexit outcome.
As ever there is never any shortage of opportunities to invest! The number of people of traditionally “working age” (who pay the most in tax) is expected to remain static into the future but as a whole the population is growing and getting older. This is being reflected in demand for public services and a massive increase in NHS spending has already been announced. We must support our vital public services, ensure that we don’t stifle investment through too high taxes and maintain Government spending in areas to boost productivity (and therefore boost future tax revenue). At the same time we need to keep our national finances under control: we cannot allow the next generation to be saddled by ever greater levels of our debt and after eight years of uninterrupted growth we need to be ready to support the country through an economic downturn when it comes. The economic balancing act is not easy – but it is absolutely critical.
Photo caption: Shipley History Society kicked off their new season of talks with a presentation on Sussex Pub Signs in St Andrews Hall last week.