The Week 30 August 2024

Westminster is waking up for ‘back to school’ season next week. Parliament returns on Monday for a short sitting before it rises again on the 12th of September for party conferences.

The news has been dominated by the Prime Minister’s speech on Tuesday laying the groundwork for a “painful” Budget, with speculation about the scope for tax rises in areas the Chancellor did not rule out last month.

The Office for Budget Responsibility (OBR) will be key to making sure the Budget numbers add up. One of the first Bills that Labour have planned for this Parliament will further strengthen their role .

So it’s interesting that an OBR discussion paper published yesterday suggests that we should take a much longer-term view of the benefits of public investment. This contrasts sharply with the fiscal rule the Chancellor has pledged to retain — keeping debt falling as a share of GDP within a moving five-year target.

The OBR’s research found a sustained 1 per cent of GDP increase in public investment (in capital and assets) could plausibly increase the level of potential output by just under 0.5 per cent after five years, but increase it by around 2.5 per cent in 50 years. Reform has consistently argued for a longer-term approach to public investment, particularly compared to day-to-day spending, and this paper will doubtless feature in debates about how to address sluggish economic growth in the Autumn Budget on 30 October. Also in OBR news, Sam Freedman’s article in Prospect argued that the watchdog is limited in how much it can ever effectively prevent misleading spending forecasts.

Finally, we were pleased to see Sir Patrick Vallance committing to redirect UKRI funding to support the government's missions, which we called for in our paper 'Mission control' earlier this year. Public R&D is a vital tool, including to crowd in private sector investment, and is used for a similar purpose in Australia and Sweden.

Onto our chart of the week…

International comparisons are an excellent aid to policymakers. The world is a laboratory of public policy experiments we can learn from. Unfortunately they aren’t always flattering to the UK, and our chart (rather than usual read) of the week is no exception. Our World in Data compiled international statistics on homelessness, showing Britain as a significant outlier. But when it comes to those specifically sleeping rough on the streets, many countries are faring far worse. Britain’s acute challenge is with the numbers staying in temporary accommodation and shelters — doubtless linked to the challenges of high housing costs.

As with all international comparisons, it comes with a significant health warning — homelessness is measured very differently in different countries, though the Institute of Global Homelessness and OECD are working to make the national statistics more comparable. And enthusiasts for the use of better data in government would do well to read James Plunkett’s blog on dashboards.