IFS warns it's hard to see how 'relentless increase' in NHS funding can continue
We've reported on the mood music from the Institute for Fiscal Studies (IFS) on yesterday's spending review, which is Rachel Reeves is dangerously close to having to raise taxes (more in our previous post).
Let's dig a little deeper into the figures the IFS has crunched.
Not a return to austerity
IFS director Paul Johnson says the spending review is "not a period of austerity", with capital spending rising by 3.6% a year, and day-to-day public spending rising by 1.7%.
This means investment spending as a fraction of GDP has risen from a recent low of 1.5% in 2013-2014, to 2.6% over this parliament - a 0.1% increase on 2023-24.
A decade of a growing state
On departmental spending specifically, Johnson points out this is also rising as a fraction of national income.
It is going to reach 21.5% in 2028-29, compared to 20.7% in 2023-24.
This is a "substantial increase in the size of the state", though he says this was mostly under the last government.
"This really is a decade of a growing state," he says.
Relentless increase in NHS funding - can it continue?
Turning to funding for the NHS, the jewel in Rachel Reeves' crown, and the IFS is more critical.
He says the Department of Health and Social Care will swallow 41% of day-to-day public spending by 2028-29, up from 39% in 2024 and just 26% in 2000-01.
Johnson says: "One has to question for how much longer this relentless increase can continue."
Even so, he questions whether it will be enough to achieve the government's waiting list targets or fund the workforce plan.
Could there be trouble ahead?
Johnson says as well as funding for the NHS rising, the commitment to spend 2.5% of GDP on defence by 2027 means other budgets are tight.
"With day-to-day budgets growing so slowly, there is not going to be much room for further significant increases in public sector pay," he warns, and there could be "trouble ahead" with the unions.
On the hardest hit departments, he says: "The aid budget is now pared back to its lowest level for a very long time."