Changes in the composition of spending and rising education participation mean public service spending is more progressive than in the 1980s & 1990s.
In this comment, Kate Ogden and David Phillips draw on their new report for the IFS Deaton Review of Inequalities to summarise long-term changes in the distribution of public service spending in the UK – and to discuss how recent and planned policy reforms are changing things.
On the eve of the COVID-19 pandemic in 2019–20, the UK government spent a total of £509 billion on providing public services such as healthcare, education, defence, policing and social care – equivalent to an average of £7,600 per person. This was more than twice as much as was spent on the benefits, tax credits and state pensions that provide cash directly to households, and equivalent to 22.5% of GDP. Increases in public spending and the economic challenges seen over subsequent years will push public service spending towards a quarter of national income this year.
Because this spending is funded via taxation, it would redistribute significantly from richer to poorer people, even if the same amount was spent on providing public services to everyone. In fact, more is spent on poorer individuals and families for a range of public services, including the two largest: health and schools.
