Public finances · United Kingdom · financial year 2025–26

£109bn on debt interest. What room is left for Britain’s priorities?

Central-government debt interest, net of the Bank of England’s asset purchase scheme, was £108.9bn in 2025–26, equivalent to 8.8% of public-sector current receipts, against 6.6% in 2000–01. The state also borrowed £134.3bn to cover the gap between spending and income. Both figures are provisional.

Priority: Create credible fiscal space while protecting valuable services, investment and shock capacity. What would change it →

Evidence last reviewed 3 October 2026

Overview

The short version

Three key measures

What does the debt cost to service each year?
£108.9bn
8.8% of all public sector receipts. Up from £25.2bn in 2020–21; the OBR’s March 2026 forecast reaches £137bn by 2030–31. Central government, net of the Bank of England’s asset purchase facility.
United Kingdom · 2025–26, provisional
Source: What does the debt cost to service each year?
Provisional · OBR, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026, sheets "Aggregates (£bn)", "Aggregates (per cent of GDP)" and "Receipts (£bn)"
Why interest costs change →
How much more did the state spend than it raised?
£134.3bn
Public sector net borrowing: 4.4% of GDP, down from £149.8bn the year before. Spending £1,366bn minus receipts £1,231bn.
United Kingdom · 2025–26, provisional
Source: How much more did the state spend than it raised?
Provisional · OBR, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026, sheets "Aggregates (£bn)", "Aggregates (per cent of GDP)" and "Receipts (£bn)"
Money in, money out →
How large is the debt?
93.3%of GDP
£2,917bn of public sector net debt (excluding public sector banks) at end-March. 89.1% if the Bank of England is excluded too. It was 35% before the 2008 crash. A stock, so never add it to the yearly figures beside it.
United Kingdom · End-March 2026
Source: How large is the debt?
Provisional · OBR, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026, sheets "Aggregates (£bn)", "Aggregates (per cent of GDP)" and "Receipts (£bn)"
What changes debt relative to GDP? →

Who feels this most?

National totals hide where restraint lands. In the 2010s much of the squeeze fell on English councils, whose grants from central government fell by 46% in real terms between 2010–11 and 2019–20. Councils serving poorer areas, which relied most on those grants, lost the most per resident. Six councils issued section 114 notices — a ban on new non-essential spending — between 2020 and mid-2024, and 29 had been granted exceptional financial support.

The evidence

From the annual budget to debt and future choices

Money in, money out

Start with one year. Receipts and spending are both flows — money in and out over twelve months — so they can sit on one scale, and the gap between them is what the state borrowed. The debt is different: it is everything still owed, a stock built up by past borrowing. Never add it to these figures; compare it with them only as a ratio.

Where does the annual public budget come from — and where does it go?

In 2025–26 the state spent £1,366bn, raised £1,231bn and borrowed the £134bn gap

Public sector current receipts by source and total managed expenditure by type, 2025–26, £bn cash, drawn on one scale. Borrowing is the difference.

United Kingdom · Financial year 2025–26 (April to March)

Money in: public sector current receipts

£1,231.3bn

Income tax£329.3bn
National Insurance£204.4bn
VAT£210.8bn
Corporation tax£99.6bn
Council tax£50.4bn
Other taxes and duties£213.1bn
Interest, dividends and operating surplus£123.6bn

The gap

£134.3bn borrowed — public sector net borrowing, 2025–26

Money out: total managed expenditure

£1,365.6bn

Day-to-day spending on services, benefits and pay£1,097.5bn
Debt interest (central government, net of APF)£108.9bn
Depreciation of public assets£72.3bn
Net investment£86.9bn

Four taxes — income tax, National Insurance, VAT and corporation tax — raise about 69% of the money. On the other side, interest is now about 8p in every £1 the state spends, more than net investment in roads, schools and hospitals combined. Borrowing is only the gap between two very large totals, so a small percentage change in either moves it a lot. These are provisional figures.

United Kingdom · Financial year 2025–26 (April to March) · Provisional outturn: ONS revises the latest year for several months

Sources, definitions and data

Geography:: United Kingdom — Whole public sector: central government, local government and public corporations
Measure:: £ billion, cash (nominal)
Period:: Financial year 2025–26 (April to March)
Status:: Provisional outturn: ONS revises the latest year for several months
Calculation:: Receipt categories are UK Facts groupings of the Databank’s tax columns and sum to the published total. Day-to-day spending excluding debt interest = public sector current expenditure minus central government debt interest net of APF.
Compare with:: Previous year’s borrowing: £149.8bn
Not included / breaks:: Interest paid by local government and public corporations, and the difference between gross and net-of-APF interest, sit in the day-to-day line. The debt stock is not part of this picture: it is a separate tile and chart. VAT includes VAT refunded to public bodies, which the national accounts count as receipts.

Source: OBR, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026, sheets "Aggregates (£bn)", "Aggregates (per cent of GDP)" and "Receipts (£bn)" (released September 2026). Chart FISCAL-01.

View the data as a table

Item	2025–26, £bn
Receipts: Income tax	329.3
Receipts: National Insurance	204.4
Receipts: VAT	210.8
Receipts: Corporation tax	99.6
Receipts: Council tax	50.4
Receipts: Other taxes and duties	213.1
Receipts: Interest, dividends and operating surplus	123.6
Receipts: total	1231.3
Spending: Day-to-day spending on services, benefits and pay	1097.5
Spending: Debt interest (central government, net of APF)	108.9
Spending: Depreciation of public assets	72.3
Spending: Net investment	86.9
Spending: total managed expenditure	1365.6
Public sector net borrowing (spending minus receipts)	134.3

Where the spending goes

Where does the spending go?

Social protection and health take 49% of all public spending

Public sector expenditure by function (UN COFOG), 2025–26, £bn cash, with debt interest shown separately from other general public services. Total managed expenditure in this publication: £1,360.1bn.

United Kingdom · Financial year 2025–26 (outturn)

Social protectionPensions, benefits, social care£407.3bn
Health£257.5bn
Public sector debt interestPESA gross measure£130.3bn
Education£125.7bn
Economic affairsIncluding transport£94.0bn
DefenceUN COFOG definition, not NATO£65.4bn
Public order and safety£55.7bn
Other general public services£35.2bn
Housing and community amenities£22.5bn
Environment protection£19.2bn
Recreation, culture and religion£15.1bn
Accounting adjustmentsNot a service: national-accounts items that reconcile spending on services to the total£132.5bn

Spending is concentrated: pensions and benefits (social protection) and health together are about 49% of the total. Debt interest, on PESA’s gross measure, is larger than spending on education or defence. These categories describe what money buys, not which department spends it, and they overlap with no other figure on this page except the total.

United Kingdom · Financial year 2025–26 (outturn) · Accredited official statistics; the latest year is provisional outturn

Sources, definitions and data

Geography:: United Kingdom
Measure:: £ billion, cash (nominal)
Period:: Financial year 2025–26 (outturn)
Status:: Accredited official statistics; the latest year is provisional outturn
Calculation:: “Other general public services” = general public services minus public sector debt interest. EU transactions (−£0.2bn) not shown.
Compare with:: Total managed expenditure £1,360.1bn (PESA, July 2026)
Not included / breaks:: PESA was published in July; FISCAL-01 uses the September public sector finances, which revise spending to £1,365.6bn. PESA’s debt interest (£130.3bn) is gross public sector interest, not the net-of-APF measure used in the headline. COFOG defence excludes military pensions, so it is lower than the NATO measure.

Source: HM Treasury, Public Expenditure Statistical Analyses 2026, Table 4.2 (released 16 July 2026). Chart FISCAL-03.

View the data as a table

Function	2025–26, £bn
Social protection	407.3
Health	257.5
Public sector debt interest	130.3
Education	125.7
Economic affairs	94.0
Defence	65.4
Public order and safety	55.7
Other general public services	35.2
Housing and community amenities	22.5
Environment protection	19.2
Recreation, culture and religion	15.1
Accounting adjustments	132.5

Who receives social security spending, and why it grows, is on the benefits and pensions pages; health spending on the NHS funding page.

Why interest costs change

How has the interest bill changed, and how much of the budget does it take?

Interest has been above £100bn for four years and is forecast to keep rising in cash terms

Central government debt interest net of the Asset Purchase Facility: £bn cash (top) and as a share of public sector current receipts (bottom), financial years ending 2001 to 2031. Solid = outturn; dashed = OBR forecast.

United Kingdom · 2000–01 to 2025–26 outturn; 2026–27 to 2030–31 forecast

£ billion, cash

1996–2031 displayed window · dashed lines show forecasts. Shading marks years outside the displayed record.

Share of public sector current receipts

1996–2031 displayed window · dashed lines show forecasts. Shading marks years outside the displayed record.

Interest fell to £25.2bn in 2020–21, when rates were near zero and inflation low, then rose more than four times over as inflation pushed up payments on index-linked gilts and Bank Rate rose. As a share of receipts it peaked at 10.8% in 2022–23 and was 8.8% in 2025–26 — high by the standards of the last 25 years and similar to the mid-1990s. The OBR forecast rises in cash, but stays near 9% of receipts.

United Kingdom · 2000–01 to 2025–26 outturn; 2026–27 to 2030–31 forecast · Outturn to 2025–26 (latest year provisional); forecasts from the OBR’s March 2026 Economic and fiscal outlook, which predates the latest outturn

Sources, definitions and data

Geography:: United Kingdom
Measure:: £ billion, cash; and % of public sector current receipts
Period:: 2000–01 to 2025–26 outturn; 2026–27 to 2030–31 forecast
Status:: Outturn to 2025–26 (latest year provisional); forecasts from the OBR’s March 2026 Economic and fiscal outlook, which predates the latest outturn
Calculation:: As published. The share of receipts is debt interest divided by public sector current receipts, both from the Databank.
Compare with:: 2020–21 low (£25.2bn); 2022–23 peak (£111.9bn)
Not included / breaks:: Cash figures are not adjusted for inflation; the lower panel removes that problem by expressing interest as a share of receipts. Forecasts depend on market interest rates and inflation at the time they were made.

View the data as a table

Financial year	Debt interest £bn	% of receipts	Status
2000–01	26.9	6.6	Outturn
2001–02	23.0	5.6	Outturn
2002–03	21.7	5.2	Outturn
2003–04	23.2	5.1	Outturn
2004–05	25.9	5.4	Outturn
2005–06	27.8	5.3	Outturn
2006–07	30.8	5.6	Outturn
2007–08	33.7	5.8	Outturn
2008–09	33.5	5.9	Outturn
2009–10	28.1	5.0	Outturn
2010–11	41.0	6.8	Outturn
2011–12	43.5	7.0	Outturn
2012–13	38.6	6.1	Outturn
2013–14	37.8	5.7	Outturn
2014–15	34.1	4.9	Outturn
2015–16	34.5	4.8	Outturn
2016–17	36.7	4.9	Outturn
2017–18	42.8	5.5	Outturn
2018–19	39.2	4.8	Outturn
2019–20	39.3	4.7	Outturn
2020–21	25.2	3.2	Outturn
2021–22	55.5	6.0	Outturn
2022–23	111.9	10.8	Outturn
2023–24	107.4	9.8	Outturn
2024–25	106.1	9.3	Outturn
2025–26	108.9	8.8	Provisional outturn
2026–27	109.4	8.4	OBR forecast
2027–28	116.7	8.5	OBR forecast
2028–29	125.9	8.8	OBR forecast
2029–30	134.7	9.0	OBR forecast
2030–31	137.1	8.8	OBR forecast

Scroll the table sideways to see every column.

Three mechanisms drive the bill, and the OBR has estimated how sensitive it is to each (on its March 2025 forecast basis). About a quarter of gilts are index-linked, so their payments rise with RPI inflation: one percentage point more inflation adds roughly £7bn in a year. The Bank of England pays Bank Rate on the reserves created by quantitative easing, so one point higher Bank Rate adds about £7.4bn. Higher gilt yields act slowly, because only new and maturing debt is refinanced: about £1.5bn in the first year, £2.7bn the next.

These sensitivities explain why interest jumped when inflation and rates rose together in 2022. They are not a split of today’s bill into causes, and a lower bill would not automatically buy a fixed number of hospitals: what any saving funds is a separate decision.

What changes debt relative to GDP?

How has debt changed relative to the size of the economy?

Debt rose in three steps to about 93% of GDP and is forecast to edge higher

Public sector net debt at end-March as a percentage of GDP (GDP centred on end-March): excluding public sector banks, and also excluding the Bank of England. Solid = outturn; dashed = OBR March 2026 forecast.

United Kingdom · End-March 2000 to end-March 2026 outturn; forecast to 2031

1996–2031 displayed window · dashed lines show forecasts. Shading marks years outside the displayed record.

Debt was about a third of GDP before 2008. The financial crisis took it to about 70%, the 2010s added more, and Covid pushed it above 95%. Since then the ratio has been roughly flat because high inflation raised cash GDP. Excluding the Bank of England, whose bond purchases and lending schemes affect the headline measure, debt is lower but has risen every year since 2021–22. Forecasts are not outturns.

United Kingdom · End-March 2000 to end-March 2026 outturn; forecast to 2031 · Latest year provisional; forecast years from March 2026, before the latest outturn

Sources, definitions and data

Geography:: United Kingdom
Measure:: % of GDP
Period:: End-March 2000 to end-March 2026 outturn; forecast to 2031
Status:: Latest year provisional; forecast years from March 2026, before the latest outturn
Calculation:: As published in the Databank “Aggregates (per cent of GDP)” sheet.
Compare with:: 35.5% at end-March 2008; 84.5% at end-March 2020
Not included / breaks:: The monthly ONS bulletin publishes the ratio for later months on a rolling-GDP basis, so a figure quoted for, say, August differs from this end-March figure. That is a different date, not a contradiction.

View the data as a table

End of financial year	PSND ex % GDP	PSND ex BoE % GDP	Status
1999–00	32.4	32.5	Outturn
2000–01	28.2	28.3	Outturn
2001–02	28.0	28.1	Outturn
2002–03	29.7	29.8	Outturn
2003–04	30.8	30.9	Outturn
2004–05	33.4	33.5	Outturn
2005–06	34.2	34.3	Outturn
2006–07	34.9	35.1	Outturn
2007–08	35.5	35.6	Outturn
2008–09	50.2	50.3	Outturn
2009–10	64.4	63.6	Outturn
2010–11	70.6	70.3	Outturn
2011–12	73.9	74.2	Outturn
2012–13	77.2	75.9	Outturn
2013–14	78.8	76.5	Outturn
2014–15	81.1	78.7	Outturn
2015–16	80.6	78.4	Outturn
2016–17	82.7	76.8	Outturn
2017–18	81.7	73.2	Outturn
2018–19	79.7	71.9	Outturn
2019–20	84.5	76.4	Outturn
2020–21	95.5	85.5	Outturn
2021–22	94.3	81.2	Outturn
2022–23	93.1	82.4	Outturn
2023–24	94.1	85.7	Outturn
2024–25	93.4	87.9	Outturn
2025–26	93.3	89.1	Outturn
2026–27	94.8	92.3	OBR forecast
2027–28	95.7	93.5	OBR forecast
2028–29	96.3	94.5	OBR forecast
2029–30	96.1	94.5	OBR forecast
2030–31	95.1	94.3	OBR forecast

Scroll the table sideways to see every column.

The ratio moves with four things: new borrowing adds to the debt; nominal GDP growth — real growth plus inflation — enlarges the denominator; the interest rate on the debt compounds it; and Bank of England operations change the headline measure. Debt can therefore rise in pounds every year while the ratio is flat, as it has been since 2021, because inflation raised cash GDP. When the interest rate on the debt is above the growth rate of the economy, holding the ratio steady needs a primary surplus — receipts above spending before interest. On the OBR Databank’s measure the UK last ran one in 2001–02; the March 2026 forecast has one returning in 2028–29.

Who feels this most?

Which councils absorbed the biggest cuts?

The most deprived councils lost more than twice as much funding per person as the least deprived

Change in English councils’ core funding per person, real terms: 2010–11 to 2024–25 (filled dot) and 2010–11 to 2019–20 (open dot).

England (councils) · 2010–11 to 2019–20 and to 2024–25 (2024–25 as planned in June 2024)

2010–11 to 2024–252010–11 to 2019–20

Most deprived tenth of councils-26%
All English councils-18%
Least deprived tenth of councils-11%

Central government funding for councils fell by 46% in real terms in the 2010s. Council tax replaced only part of it, and councils serving poorer areas — which relied most on grants — lost most per resident. Increases since 2019–20 have restored only some of the gap. Councils protected statutory duties such as children’s social care; spending on culture, housing, planning and transport per person fell by over 40%.

England (councils) · 2010–11 to 2019–20 and to 2024–25 (2024–25 as planned in June 2024) · Independent analysis of official data

Sources, definitions and data

Geography:: England (councils)
Measure:: % change per person, real terms (GDP deflator)
Period:: 2010–11 to 2019–20 and to 2024–25 (2024–25 as planned in June 2024)
Status:: Independent analysis of official data
Calculation:: As published in the IFS report’s key findings; core funding = central government grants, council tax and retained business rates on a like-for-like basis.
Compare with:: Average for all English councils
Not included / breaks:: England only: local government is devolved. Excludes income from fees, charges and investments. 2024–25 was a planned figure when published.

Source: IFS, How have English councils’ funding and spending changed? 2010 to 2024 (Report R318) (released June 2024). Chart FISCAL-05.

View the data as a table

Group	To 2024–25	To 2019–20
Most deprived tenth of councils	-26%	-35%
All English councils	-18%	-26%
Least deprived tenth of councils	-11%	-15%

Local figures for Hampshire’s councils: see the Hampshire pages.

Shareable visual summary

Visual summary

Image held

The image is not offered for download or sharing until the reasons below are resolved. The chart here is drawn from today’s records.

£109bn on debt interest. What room is left for Britain’s priorities?

£108.9bndebt interest, 2025–26
8.8%of public sector receipts, 2025–26
£134.3bnborrowed, 2025–26

Three flows for the same financial year. Net debt (a stock) is a different measure and is not added to them.

Why the supplied image is held

Prints £109.3bn; the current record is £108.9bn for 2025-26 (Central government debt interest, net of APF)
Prints 93.8%; the current record is 93.3% for 2025-26 (Public sector net debt excluding public sector banks, % of GDP)
The image prints £109.3bn debt interest from the August OBR databank; the September release revises it to £108.9bn, and the 93.8% net debt figure (end of August) is a different period from this page’s 93.3% (end of 2025–26).

Text and data version

£109bn on debt interest. What room is left for Britain’s priorities? Central-government debt interest, net of the Bank of England’s asset purchase scheme, was £108.9bn in 2025–26, equivalent to 8.8% of public-sector current receipts, against 6.6% in 2000–01. The state also borrowed £134.3bn to cover the gap between spending and income. Both figures are provisional. The share is of public-sector current receipts, not of tax or of spending.

Records behind this visual summary
Measure	Value	Period	Geography	Type	Source
Central government debt interest, net of APF	£108.9bn	2025-26	United Kingdom	survey estimate	Office for Budget Responsibility, Public Finances Databank
Debt interest as a share of public sector current receiptsCalculation: Central government debt interest net of APF (% of GDP) ÷ Public sector current receipts (% of GDP) × 100	8.8%	2025-26	United Kingdom	derived calculation	Office for Budget Responsibility, Public Finances Databank
Public sector net borrowing	£134.3bn	2025-26	United Kingdom	survey estimate	Office for Budget Responsibility, Public Finances Databank
Public sector net debt excluding public sector banks, % of GDP	93.3%	2025-26	United Kingdom	survey estimate	Office for Budget Responsibility, Public Finances Databank

All visual summaries, their source records and their publication state are listed on Shareable visuals.

Go deeper

Money in, money out: what was borrowed last year?

+1.3percentage points1996-97–2025-26United Kingdom · % of GDP

3.1% → 4.4%1996-97–2025-26

Borrowing as a share of GDP. Actual and provisional observations; forecasts remain in the main charts.

Sources and data

The annual deficit — how much more the public sector spends than it receives — as a share of GDP, financial year basis, including the OBR's own forecast years. Financial year basis (year label e.g. "2025-26" = FY starting 6 April 2025); charted here from a 1 April period-start approximation.

Source dataset →

Period	% of GDP	Status
1996-97	3.122	Outturn
1997-98	1.095	Outturn
1998-99	0.012	Outturn
1999-00	-1.075	Outturn
2000-01	-1.459	Outturn
2001-02	0.486	Outturn
2002-03	2.893	Outturn
2003-04	3.406	Outturn
2004-05	3.837	Outturn
2005-06	3.188	Outturn
2006-07	2.74	Outturn
2007-08	2.866	Outturn
2008-09	7.302	Outturn
2009-10	10.187	Outturn
2010-11	8.694	Outturn
2011-12	7.264	Outturn
2012-13	7.131	Outturn
2013-14	5.653	Outturn
2014-15	5.194	Outturn
2015-16	4.121	Outturn
2016-17	2.817	Outturn
2017-18	2.904	Outturn
2018-19	2.013	Outturn
2019-20	2.596	Outturn
2020-21	14.731	Outturn
2021-22	4.832	Outturn
2022-23	4.7	Outturn
2023-24	4.848	Outturn
2024-25	5.105	Outturn
2025-26	4.374	Outturn

The whole annual budget on one scale.Read the chapter →

Where does the spending go?

+9.1percentage points1996-97–2025-26United Kingdom · % of GDP

35.4% → 44.5%1996-97–2025-26

Total managed expenditure relative to GDP. Does not measure value for money.

Sources and data

All public spending (current + capital, central + local government) as a share of GDP, financial year basis. Financial year basis (year label e.g. "2025-26" = FY starting 6 April 2025); charted here from a 1 April period-start approximation.

Source dataset →

Period	% of GDP	Status
1996-97	35.426	Outturn
1997-98	35.471	Outturn
1998-99	34.989	Outturn
1999-00	34.601	Outturn
2000-01	34.905	Outturn
2001-02	36.052	Outturn
2002-03	37.417	Outturn
2003-04	38.699	Outturn
2004-05	39.728	Outturn
2005-06	39.699	Outturn
2006-07	39.67	Outturn
2007-08	40.028	Outturn
2008-09	43.043	Outturn
2009-10	45.967	Outturn
2010-11	45.504	Outturn
2011-12	44.365	Outturn
2012-13	43.815	Outturn
2013-14	42.233	Outturn
2014-15	41.721	Outturn
2015-16	40.866	Outturn
2016-17	40.093	Outturn
2017-18	39.83	Outturn
2018-19	39.164	Outturn
2019-20	39.182	Outturn
2020-21	52.313	Outturn
2021-22	43.251	Outturn
2022-23	43.973	Outturn
2023-24	44.158	Outturn
2024-25	43.98	Outturn
2025-26	44.485	Outturn

Spending by function, from the Treasury’s own analysis.Read the chapter →

Why do interest costs change?

+288.9%1996-97–2025-26United Kingdom · £bn

28 → 108.91996-97–2025-26

Debt interest in cash £bn, net of the Asset Purchase Facility. Changes include inflation and financing costs.

Sources and data

Interest paid on government debt, net of the Bank of England Asset Purchase Facility's own interest income — the OBR's preferred debt-interest measure, financial year basis. Financial year basis (year label e.g. "2025-26" = FY starting 6 April 2025); charted here from a 1 April period-start approximation.

Source dataset →

Period	£bn	Status
1996-97	27.991	Outturn
1997-98	29.821	Outturn
1998-99	29.441	Outturn
1999-00	25.899	Outturn
2000-01	26.891	Outturn
2001-02	23.015	Outturn
2002-03	21.747	Outturn
2003-04	23.221	Outturn
2004-05	25.885	Outturn
2005-06	27.797	Outturn
2006-07	30.763	Outturn
2007-08	33.699	Outturn
2008-09	33.518	Outturn
2009-10	28.059	Outturn
2010-11	41.004	Outturn
2011-12	43.467	Outturn
2012-13	38.636	Outturn
2013-14	37.814	Outturn
2014-15	34.112	Outturn
2015-16	34.46	Outturn
2016-17	36.71	Outturn
2017-18	42.823	Outturn
2018-19	39.167	Outturn
2019-20	39.261	Outturn
2020-21	25.225	Outturn
2021-22	55.47	Outturn
2022-23	111.869	Outturn
2023-24	107.371	Outturn
2024-25	106.054	Outturn
2025-26	108.851	Outturn

The mechanisms, without guessed shares.Read the chapter →

What happened to councils?Grants from Whitehall fell 46% in real terms in the 2010s; poorer areas lost most.The local squeeze, by deprivation.Read the chapter → What happened to councils?
What changes debt relative to GDP?Borrowing, growth, inflation and the Bank of England — not just the headline deficit.Why debt can rise in cash while the ratio falls.Read the chapter → What changes debt relative to GDP?
What are the choices on tax, spending and growth?Four routes compared on yield, owner, timing and trade-offs.The options, with their evidence.Read the chapter → What are the choices on tax, spending and growth?

Evidence → choices → outcomes

What could improve it?

Services funded at the level Parliament chooses, paid for by tax and borrowing choices that are stated openly and sustainable.

These options link to their national assessment, including funding, delivery constraints and remaining uncertainties.

Assessed option · provisional
Turn investment promises into a deliverable pipeline
Approved-versus-aspirational status, milestones and completed assets in the infrastructure pipeline.
8/10 criteria scored
Coverage of the appraisal, not an impact score.
Delivery: Amber
Whole-life costs incomplete
Evidence and delivery constraints
Macro modelling and delivery audits support the rationale; they do not evaluate the incremental publication or coordination change.
Distinguish funded projects from aspirations; sequence resources; name owners and independent assurance; protect maintenance.
Growth and prosperity list Evidence and assessment
Assessed option · provisional
Collect the tax already due
8/10 criteria scored
Coverage of the appraisal, not an impact score.
Delivery: Amber
Whole-life costs incomplete
Evidence and delivery constraints
Compliance activity can yield revenue; the return from the proposed extra high-wealth focus is not established here.
Reconcile existing forecast baseline; define cases, staff, legal powers and collection horizon; audit net additional receipts.
Equality and opportunity list Evidence and assessment
Assessed option · provisional
Close capital-tax reliefs rather than raise rates
7/10 criteria scored
Coverage of the appraisal, not an impact score.
Delivery: Amber
Whole-life costs incomplete
Evidence and delivery constraints
Illustrative rate changes and another party’s design do not cost the proposed relief package. Effects depend on exact reliefs and behaviour.
Name reliefs, thresholds, interactions and transition; obtain distributional/behavioural costing and administrative assessment.
Equality and opportunity list Evidence and assessment
Assessed option · provisional
Property and land tax reform
8/10 criteria scored
Coverage of the appraisal, not an impact score.
Delivery: Amber
Whole-life costs incomplete
Evidence and delivery constraints
Modelled designs exist; exact tax base, jurisdiction and transition are not specified.
Separate council-tax revaluation, land/property tax and transaction-tax changes; model losers and deferral options.
Equality and opportunity list Evidence and assessment

This domain in the UK SWOT →UK National Action Plan →

How we assessed these options

What would it take to improve this?

What would move the needle?

The outcome we want: Services funded at the level Parliament chooses, paid for by tax and borrowing choices that are stated openly and sustainable.

The main constraint: HM Treasury and Parliament must choose who pays — taxpayers now, service users or future taxpayers — and a debt-interest bill that moves with inflation and Bank Rate narrows those choices; growth effects and forecast headroom are not money that can be spent.

Constraint type: money, public consent, evidence.

The options on the table

What is funded now, and the changes assessed against it — the current baseline and the alternatives, before the position today and the actions.

Steady public investment through a published pipelineDelivery RAG: Amberassessed on Growth & productivity
Collect the tax already dueDelivery RAG: Amberassessed on Follow the money
Close capital-tax reliefs rather than raise ratesDelivery RAG: Amberassessed on Revenue options
Property and land tax reformDelivery RAG: Amberassessed on Revenue options
Make council and SEND funding risks explicit before promises expandDelivery RAG: Amberassessed on SEND

Provisional single-reviewer assessments from the 6 October 2026 review; not approved business cases, and not government policy.

Assessed with another page as home

These options also bear on this topic. The full assessment sits on the home page named under each.

Steady public investment through a published pipelineDelivery RAG: Amber
Home: Growth & productivity.
Funded now
Already government policy: the 10 Year Infrastructure Strategy (June 2025) commits at least £725bn over a decade and launched an online Infrastructure Pipeline in July 2025, updated at least every six months. UK Facts’ addition is to separate approved from aspirational projects on the page and to count completed, used assets rather than announcements.
The change assessed
Approved-versus-aspirational status, milestones and completed assets in the infrastructure pipeline.
Range if completed: 15.0–21.0 out of 30 (equal weights; not yet assessed: expected incremental benefit (Bn), incremental affordability (Co))
Collect the tax already dueDelivery RAG: Amber
Home: Follow the money.
Funded now
A large package is already funded and running: Autumn Budget 2024 expected £6.5bn a year by 2029–30 from 5,000 extra compliance staff and 1,800 debt-management staff. Later measures raised this: HMRC’s August 2026 update gives £10bn of additional tax revenue a year by 2029–30 and plans for 5,500 new compliance caseworkers (more than 2,400 compliance staff recruited since Autumn Budget 2024). That yield is already in the fiscal forecasts. Any further package beyond it is a UK Facts proposal.
The change assessed
Not yet defined.
Range if completed: 13.0–19.0 out of 30 (equal weights; not yet assessed: expected incremental benefit (Bn), incremental affordability (Co))
Close capital-tax reliefs rather than raise ratesDelivery RAG: Amber
Home: Revenue options.
Funded now
Baseline: CGT rates of 18% and 24% since October 2024; business asset disposal relief rising to 18% from April 2026; a £2.5m allowance for agricultural and business property relief from April 2026. Closing further reliefs instead of raising rates is a UK Facts framing of options, not government policy.
The change assessed
Not yet defined.
Range if completed: 11.0–20.0 out of 30 (equal weights; not yet assessed: increment beyond baseline (Ad), expected incremental benefit (Bn), incremental affordability (Co))
Property and land tax reformDelivery RAG: Amber
Home: Revenue options.
Funded now
Not yet stated in the record.
The change assessed
Not yet defined.
Range if completed: 13.0–19.0 out of 30 (equal weights; not yet assessed: expected incremental benefit (Bn), incremental affordability (Co))
Make council and SEND funding risks explicit before promises expandDelivery RAG: Amber
Home: SEND.
Funded now
Not yet stated in the record.
The change assessed
Build a service-duty, demand, reserves and workforce baseline for exposed councils; appraise settlement choices explicitly.
Range if completed: 16.0–22.0 out of 30 (equal weights; not yet assessed: expected incremental benefit (Bn), incremental affordability (Co))

Alternatives already on record: 23 options listed under the points in the position today (14 without an action record), and 2 earlier options under other options compared. They have not been scored in the review.

The position today

What we can build on (2)
What is holding us back (3)Debt interest was £108.9bn in 2025–26, 8.8% of public-sector receipts, and the state borrowed £134.3bn; debt stood at 93.3% of GDP. (2025–26 · United Kingdom)
What could improve things (1)Pricing the cost of current service standards, and showing tax packages as alternatives with their losers, would make trade-offs explicit before money is committed.
What could make it worse (2)

Which quadrant a point sits in is our analytical judgement, not a statistical category. Each point says whether it is a measured fact, our synthesis or a risk.

What we can build on Strengths

Independent fiscal statistics are published quickly and in detail: the OBR databank already carries 2025–26 outturn for receipts, spending, borrowing and debt interest, consistent with ONS and HM Treasury public sector finances.
Measured factConfidence: High· 2025–26 (published September 2026)· United Kingdom
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Sheets “Aggregates (£bn)” and “Receipts (£bn)”)
What government has committed to
Legislation: One major fiscal event a year, with the Office for Budget Responsibility (OBR) forecasting and assessing performance against the fiscal rules once a year at the Budget (Budget Responsibility and National Audit Act 2011 as amended; Charter, Autumn 2025).
Who and when:
Starmer government (to July 2026), 26 November 2025.
Since 20 July 2026:
Kept by the Burnham government. The Burnham government set a single autumn Budget for 28 October 2026 that “will meet our fiscal rules”; the OBR forecast that accompanies it is a statutory duty. Source: HM Treasury, Budget to move “power and money out of Westminster, and into every postcode around Britain” (31 July 2026) (Opening paragraph and video statement).
Source:
HM Treasury, Charter for Budget Responsibility: Autumn 2025 (gov.uk publication page) (Summary: “one major fiscal event per year”; OBR assesses the rules “once a year at the Budget”)
Checked 4 October 2026. A commitment is not delivery.
Options (2)
- Keep one OBR-scrutinised Budget a year
  Every tax and spending change is forecast and its costing certified by the OBR before it is relied on, so fast outturn data are matched by an independent forecast.
  Who: HM Treasury; Office for Budget Responsibility · Evidence: Expert or audit recommendation · Status: Established
  Source: HM Treasury, Charter for Budget Responsibility: Autumn 2025 (gov.uk publication page) (Summary (IMF recommendation; one fiscal event a year))
- Count each action’s cost once against the same outturn
  The site ledger reads the OBR databank and records every action’s cost and funding once, so the strength of the official statistics carries through to the action plans.
  Who: UK Facts · Evidence: Expert or audit recommendation · Status: Site-editorial action
  Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11)
Appraisal rules already require departments to separate social value from affordability and to test additionality, distribution and optimism bias.
Measured factConfidence: High· February 2026· UK central government
Source: HM Treasury, The Green Book (2026) (Chapters 6–9; affordability criteria)
What government has committed to
Policy: HM Treasury’s Green Book (2026 edition) requires appraisal to separate social value from affordability and to test additionality, distribution and optimism bias.
Who and when:
Starmer government (to July 2026), 5 February 2026.
Since 20 July 2026:
Changed by the Burnham government. The Burnham government announced a lower social discount rate (3.5% to 3%) and a new “economic potential analysis” that assesses places on what they could become; the revised Green Book text had not been published at the check date. Source: HM Treasury, Chancellor John Healey’s Growth Speech 2026 (7 September 2026) (Section “Investment”: “reducing the discount rate from 3.5% to 3%”).
Source:
HM Treasury, The Green Book (2026) (Chapters 6–9; affordability criteria)
Checked 4 October 2026. A commitment is not delivery.
Options (3)
- Publish which projects pass only because of the lower discount rate
  A list of business cases whose benefit-cost ratio crosses the threshold at 3% but not 3.5% shows what the change buys and what it costs future taxpayers, keeping affordability separate from value.
  Who: HM Treasury · Evidence: Untested proposal · Status: Site-editorial action
  Source: HM Treasury, Chancellor John Healey’s Growth Speech 2026 (7 September 2026) (Section “Investment”)
- Hold place-based “economic potential” appraisal to the Green Book additionality test
  Assessing places on future potential risks counting displaced activity as new growth; applying the existing additionality and distribution tests keeps the new method within the rules this strength rests on.
  Who: HM Treasury (Green Book team); departments · Evidence: Expert or audit recommendation · Status: Announced proposal
  Source: HM Treasury, Chancellor John Healey’s Growth Speech 2026 (7 September 2026) (Section “Investment”: “economic potential analysis”); HM Treasury, The Green Book (2026) (Chapters 6–9)
- Tie spending decisions to realistic outcomes and costs
  Uses the Green Book’s separation of value and affordability at every Spending Review decision, with a published cost of current service standards.
  Who: HM Treasury and departments · Evidence: Expert or audit recommendation · Status: Site-editorial action
  Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11); HM Treasury, The Green Book (2026) (Chapters 6–9)

What is holding us back Weaknesses

Debt interest was £108.9bn in 2025–26, 8.8% of public-sector receipts, and the state borrowed £134.3bn; debt stood at 93.3% of GDP.
Measured factConfidence: High· 2025–26· United Kingdom
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Aggregates (£bn) and (per cent of GDP))
Options assessed against this point: Deliver what is already funded (Amber delivery RAG)
What government has committed to
Target: The Starmer government’s fiscal rules bind how far borrowing and debt can rise. The fiscal rules require the current budget to be in surplus in 2029-30 and public sector net financial liabilities to be falling as a share of GDP by 2029-30.
Who and when:
Starmer government (to July 2026), 30 October 2024.
Since 20 July 2026:
Kept by the Burnham government. Chancellor John Healey: the Prime Minister and he are “in lockstep in our commitment to meeting the fiscal rules at the upcoming Budget” (28 October 2026), with a buffer for uncertainty. Source: HM Treasury, Chancellor John Healey’s Growth Speech 2026 (7 September 2026) (Paragraph beginning “The Prime Minister and I are in lockstep”).
Source:
HM Treasury, Charter for Budget Responsibility: Autumn 2025 (laid February 2026) (Paragraphs 3.6–3.7 (fiscal mandate and supplementary target))
Checked 4 October 2026. A commitment is not delivery.
Options (4)
- ShortlistedShow tax choices with their real trade-offs
  Sets out tax packages as alternatives with their losers, so any rise in receipts to reduce borrowing is a stated choice rather than an assumption.
  Who: HM Treasury; Parliament · Evidence: Modelled scenario · Status: External proposal
  Source: Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter) (Key findings)
- ShortlistedRestrain or reprioritise spending with the service forgone shown
  Lower spending growth reduces borrowing; publishing the service given up makes the cost of that choice visible.
  Who: HM Treasury and departments (Spending Review) · Evidence: Expert or audit recommendation · Status: Site-editorial action
  Source: HM Treasury, Spending Review 2025 (Chapter 1 (departmental settlements to 2028-29))
- Raise the growth rate
  A larger economy raises receipts and lowers debt relative to GDP; the debt ratio is very sensitive to the gap between interest rates and growth.
  Who: HM Treasury and growth departments · Evidence: Modelled scenario · Status: External proposal
  Source: Office for Budget Responsibility, Fiscal risks and sustainability (July 2026) (Debt dynamics and interest–growth differential)
- Borrow for investment only where the return exceeds the interest cost
  Public investment can raise potential output over time; restricting extra borrowing to projects whose appraised return beats the cost of debt protects the debt ratio in the long run.
  Who: HM Treasury · Evidence: Modelled scenario · Status: External proposal
  Source: Office for Budget Responsibility, Public investment and potential output (Discussion Paper No. 5) (Paragraph 4.7)
Those totals say how tight the budget is, not which spending is least valuable: the NAO finds spending decisions short-term and reactive, with evaluation too rarely used.
Our synthesisConfidence: Moderate
Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11)
Options assessed against this point: Deliver what is already funded (Amber delivery RAG)
What government has committed to
Policy: Spending Reviews every two calendar years, each covering at least three years: Spending Review 2025 set day-to-day budgets to 2028-29 and capital to 2029-30, to be reviewed at the next Spending Review in 2027.
Who and when:
Starmer government (to July 2026), 11 June 2025.
Since 20 July 2026:
Kept by the Burnham government. The Burnham government’s Rewiring the State statement plans to use the upcoming Spending Review for devolved income-tax arrangements, and the Chancellor referred to work “ahead of the Spending Review”. Source: Cabinet Office, Rewiring the State – Cabinet Statement (31 July 2026) (Section III: “We will use the upcoming Spending Review”).
Source:
HM Treasury, Spending Review 2025 (Annex (spending framework): “reviewed at the next SR in 2027”)
Checked 4 October 2026. A commitment is not delivery.
Options (3)
- ShortlistedTie spending decisions to realistic outcomes and costs
  Each settlement states the outcome it buys and the cost of current standards, so decisions are judged against evidence rather than made reactively.
  Who: HM Treasury and departments · Evidence: Expert or audit recommendation · Status: Site-editorial action
  Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11)
- Publish the departmental Strategic Plans the framework promises
  Plans with outcomes and metrics published alongside the Estimates let Parliament compare spending with results across years.
  Who: HM Treasury, Cabinet Office and departments · Evidence: Expert or audit recommendation · Status: Announced proposal · Works through Government delivery: Published plans would end the gap in outcome reporting that the government page records since July 2021.
  Source: HM Treasury and Cabinet Office, The government’s planning and performance framework (updated 26 November 2025) (Section “Strategic outcomes and metrics”)
- Plan evaluation before money is spent
  Magenta Book evaluation designed into major programmes gives the next Spending Review evidence on what worked.
  Who: Departments; Evaluation Task Force · Evidence: Expert or audit recommendation · Status: Established
  Source: HM Treasury / Evaluation Task Force, The Magenta Book: Central Government guidance on evaluation (Chapter 1, sections 1.5–1.6)
Pressure has reached councils’ day-to-day budgets: 36 English councils were given in-principle exceptional financial support for 2026–27 — permission to borrow or sell assets to balance their budgets, not new grant.
Measured factConfidence: High· 2026–27· England
Source: Ministry of Housing, Communities and Local Government, Exceptional Financial Support for local authorities for 2026-27 (Table “Exceptional Financial Support requests from local authorities: 2026-27” (36 rows))
What government has committed to
Policy: In-principle exceptional financial support for 2026–27 for 36 councils, agreed before they set their budgets.
Who and when:
Starmer government (to July 2026), 23 February 2026.
Since 20 July 2026:
Kept by the Burnham government. The list was updated under the Burnham government on 18 August 2026; no change to the councils supported was announced. Source: Ministry of Housing, Communities and Local Government, Exceptional Financial Support for local authorities for 2026-27 (Updates: 18 August 2026 (assurance reviews and capitalisation directions added)).
Source:
Ministry of Housing, Communities and Local Government, Exceptional Financial Support for local authorities for 2026-27 (Introduction and 2026-27 table)
Checked 4 October 2026. A commitment is not delivery.
Options (2)
- Multi-year local government settlements and a needs-based funding formula
  Lets councils plan social care, special educational needs and homelessness spending beyond one year.
  Who: MHCLG and HM Treasury · Evidence: Untested proposal · Status: External proposal
- A national settlement for high-needs (special educational needs) deficits
  Removes one of the cost pressures that pushes councils into exceptional support.
  Who: DfE, MHCLG and HM Treasury · Evidence: Untested proposal · Status: External proposal

What could improve things Opportunities

Pricing the cost of current service standards, and showing tax packages as alternatives with their losers, would make trade-offs explicit before money is committed.
Depends on: The Treasury publishes consistent baselines and packages on one price year, and receipts are counted once.
Our synthesisConfidence: Moderate
Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11); Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter) (Key findings)
Options assessed against this point: Deliver what is already funded (Amber delivery RAG)
What government has committed to
No commitment found. No commitment to publish the cost of current service standards or alternative tax packages was found. At fiscal events HM Treasury publishes OBR-certified costings and distributional analysis of the measures it has chosen, not of the alternatives.
Searched: gov.uk search API (policy papers, speeches, press releases since 20 July 2026), the Plan for Change and planning and performance framework, 4 Oct 2026
Checked 4 October 2026. A commitment is not delivery.
Options (3)
- ShortlistedShow tax choices with their real trade-offs
  Puts specified tax packages side by side on one baseline with who loses, before money is committed.
  Who: HM Treasury; Parliament · Evidence: Modelled scenario · Status: External proposal
  Source: Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter) (Key findings)
- ShortlistedPublish a cost of current service standards for each service
  A baseline of what today’s standards cost lets restraint or reallocation be shown as a service change, not a number.
  Who: HM Treasury and departments · Evidence: Expert or audit recommendation · Status: Site-editorial action
  Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11)
- Count each option’s cost once in one ledger
  Keeps alternative packages from drawing on the same receipts twice when they are compared.
  Who: UK Facts · Evidence: Expert or audit recommendation · Status: Site-editorial action
  Source: National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11)

What could make it worse Threats

Interest costs can jump without any policy change: on OBR sensitivities, 1 point higher RPI inflation adds about £7.0bn in a year and 1 point higher Bank Rate about £7.4bn.
Risk, not a certaintyConfidence: Moderate
Source: Office for Budget Responsibility, Economic and fiscal outlook ready-reckoners (consistent with the March 2025 EFO) (Sheet Debt_interest_RR)
What government has committed to
Policy: The 2026-27 financing remit cuts inflation exposure in new borrowing: index-linked gilts are 9.3% of planned gilt issuance, and auctions favour short-dated gilts (38.6% of issuance) over long-dated ones (3.2%). The index-linked stock was still 25.2% of wholesale debt at end-2025.
Who and when:
Starmer government (to July 2026), 3 March 2026.
Since 20 July 2026:
Not confirmed either way since the change of Prime Minister on 20 July 2026. No revision to the 2026-27 remit and no Burnham-era statement on debt management policy was found; the next remit is due with the 2027-28 Debt Management Report.
Source:
HM Treasury, Debt Management Report 2026-27 (Paragraphs 2.20–2.22 and 3.11)
Checked 4 October 2026. A commitment is not delivery.
Options (3)
- Keep index-linked issuance low
  Fewer gilts tied to RPI means a smaller rise in interest when inflation jumps; the stock falls only slowly because old index-linked gilts run for decades.
  Who: HM Treasury and the Debt Management Office (annual remit) · Evidence: Expert or audit recommendation · Status: Established
  Source: HM Treasury, Debt Management Report 2026-27 (Paragraphs 2.21–2.22)
- Lengthen the average maturity of new issuance
  Locking in rates for longer reduces how quickly a Bank Rate rise passes into interest costs, at the price of paying more for long-dated debt today.
  Who: HM Treasury and the Debt Management Office · Evidence: Untested proposal · Status: External proposal
  Source: HM Treasury, Debt Management Report 2026-27 (Paragraph 3.11 (current split by maturity))
- Hold a fiscal buffer against interest shocks
  Planning to meet the rules with room to spare means a rate or inflation surprise does not force mid-year tax rises or cuts.
  Who: HM Treasury · Evidence: Expert or audit recommendation · Status: Announced proposal
  Source: HM Treasury, Chancellor John Healey delivers speech to Treasury staff (21 July 2026) (“ensuring there’s a buffer also for uncertainty”)
On the OBR’s latest forecast, debt interest rises to £137.1bn by 2030–31 — a projection that weaker growth or higher rates would make worse.
Risk, not a certaintyConfidence: Moderate
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Aggregates (£bn), forecast years)
What government has committed to
Target: Meet the fiscal rules at the 28 October 2026 Budget “with a buffer to protect against uncertainty”, and control borrowing to bear down on inflation and long-term pressures.
Who and when:
Burnham government (from 20 July 2026), 7 September 2026.
Since 20 July 2026:
Made by the current government.
Source:
HM Treasury, Chancellor John Healey’s Growth Speech 2026 (7 September 2026) (Paragraph beginning “The Prime Minister and I are in lockstep”)
Checked 4 October 2026. A commitment is not delivery.
Options (3)
- Run a tighter fiscal stance to slow debt growth
  Smaller deficits mean less new debt on which interest is paid, at the cost of higher taxes or lower spending now.
  Who: HM Treasury; Parliament · Evidence: Modelled scenario · Status: External proposal
  Source: Office for Budget Responsibility, Fiscal risks and sustainability (July 2026) (Debt dynamics and interest–growth differential)
- Show tax choices with their real trade-offs
  If receipts must rise to hold the buffer, alternatives with their losers are compared first.
  Who: HM Treasury; Parliament · Evidence: Modelled scenario · Status: External proposal
  Source: Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter) (Key findings)
- Raise the growth rate
  Faster growth than the forecast lowers the debt ratio and the interest bill as a share of receipts.
  Who: HM Treasury and growth departments · Evidence: Modelled scenario · Status: External proposal
  Source: Office for Budget Responsibility, Fiscal risks and sustainability (July 2026) (Debt dynamics and interest–growth differential)

The actions worth examining

Our shortlist for this page. Research quality, policy status, cost and funding are judged separately; none of these is government policy unless its status says so.Our shortlist. None is government policy unless its status says so.

Show tax choices with their real trade-offs — not a direct public-spending programme
Tie spending decisions to realistic outcomes and costs — not yet costed / funding not identified
Publish one funding ledger across all action plans — not a direct public-spending programme

Action 1A21Policy status: external proposal
Show tax choices with their real trade-offs
Publish a few fully specified tax packages on one baseline and price year, showing net yield after behaviour and administration, who pays, and what each could fund — as alternatives, not a shopping basket.
The thread: issue, evidence, action
1. Issue Weakness: Debt interest was £108.9bn in 2025–26, 8.8% of public-sector receipts, and the state borrowed £134.3bn; debt stood at 93.3% of GDP. Also: opportunity
2. Evidence Public sector net borrowing; Debt interest, share of public-sector receipts
3. Action A21, this action
Assessment (draft, 6 October review)
Not assessed in the 6 October review; this action stays in the topic plan with its own evidence.
Who decides:
HM Treasury and Parliament (Finance Act); HMRC (collection); devolved governments for devolved taxes (UK)
Evidence:
Modelled scenario. HMRC and IFS costings are modelled estimates of specified changes; behaviour and interactions make larger packages uncertain.
Expected effect:
Direction plausible; size not established.
Cost and funding
Not yet costed
Funding: Not a direct public-spending programme
Why it is shortlisted here: Tax is the largest lever on this page; showing packages as alternatives with their losers prevents the same receipts being counted twice.
What it takes
The problem
Revenue estimates use different baselines, years and behavioural assumptions, so headline billions are added up as if they were compatible and free of losers.
Who is affected, and where
UK taxpayers (households and businesses) and users of the services the receipts would fund. Territory: UK. Most taxes are UK-wide; Scotland sets income tax rates and bands, and Wales part of income tax; property and land taxes are devolved — packages must say which apply where.
Policy status
Proposed by researchers or others, not government policy. Tax rises are not committed beyond those already legislated. The IFS sets out options; UK Facts publishes them as alternatives. Budget 2025 (26 November 2025) changed the baseline, so earlier option costings need updating.
The evidence
What the research found:
HMRC’s ready reckoner puts +1p on the basic rate of income tax at about £8.25bn in 2027–28, while +10 points on the higher rate of capital gains tax loses about £2.1bn. The IFS finds broad-based rates the most straightforward way to raise large sums, and warns that behavioural responses, interactions and devolved arrangements change net yields.
Evaluated on:
UK tax base in HMRC and IFS models; United Kingdom, 2025–2030 forecast period
Our recommendation (separate from the research):
Show each package on one baseline and price year as an alternative, with who pays, net yield and the service it could fund; never add incompatible ready-reckoner lines.
Strongest counter-evidence:
Higher taxes reduce household and business incomes and can weaken incentives; mobile bases such as capital gains respond strongly; manifesto commitments limit which rates can rise.
Effects on record
- Household and business incomes after tax: A cost or harm; size not established. modelled, moderate confidence; United Kingdom. Who pays depends entirely on the package; the benefit side depends on what the receipts fund, counted once.
Cost and funding
Cost completeness: Not yet costed. Funding: Not a direct public-spending programme.
- Modelling and publication of specified tax packages; HMRC administration of any change (administration; paid by central government): Not yet costed. The tax itself is paid by households and firms and is not a cost line here. HMRC ready-reckoner yields cannot be added together.
Who pays:
Taxpayers bear any tax rise (households, employers and, through prices and wages, workers and consumers); HMRC bears administration; publishing the packages costs analytical time.
Financing proposed:
Not a financing source until legislated and in the forecast. A package’s receipts can fund one use once.
Gap remaining:
Not applicable: this is a choice of who pays, not a spending line. Modelling capacity is not costed.
What delivery needs
Skills:
Tax modelling (HMRC, OBR, independent researchers).
Operational capacity:
HMRC systems for any new base.
Infrastructure:
None for rate changes on existing taxes.
Permissions:
None.
Law:
Finance Act for any change.
Public consent:
A parliamentary vote; manifesto commitments.
First step and stages
First step: Choose a defined package and price year, then publish reproducible assumptions and who pays. (owner: HM Treasury (or UK Facts for illustrative packages))
1. Specify packages on one baseline — HM Treasury / independent modellers (proposed stage, not an official timetable)
2. Consult and legislate — Parliament (proposed stage, not an official timetable)
3. Collect and compare outturn with the costing — HMRC; OBR (proposed stage, not an official timetable)
Depends on: A47: each receipt counted once in the ledger; An up-to-date post-Budget baseline
Trade-offs
Who gains and who loses:
Depends entirely on the tax: broad rates fall on most workers or consumers; capital taxes on wealthier households; business taxes partly on workers and customers.
What else the money or effort could do:
Raising tax for one service rules out using the same receipts for another or for reducing borrowing.
Strongest counterargument:
Spending restraint or growth could close gaps without tax rises; tax rises can weaken growth.
Risks:
Avoidance, volatile receipts and hidden burdens on groups not obvious from the headline rate.
How we would judge it
Baseline:
Public sector current receipts £1,231.3bn in 2025–26 (OBR databank).
Leading indicator:
Packages published with one baseline and distributional tables.
Outcome:
Net receipts against costing; incidence across households and firms; compliance costs.
Continue, adapt or stop:
Revisit a package when outturn falls materially short of its costing.
Earlier option on this page
This card replaces the option “Raise more in tax” (external option). Its evidence: HMRC publishes costings for illustrative changes — for example 1p on the basic rate of income tax raises about £8bn a year once fully in effect, and 1 point on employer National Insurance about £11bn. These include some behavioural response but are not full policy costings; larger changes have proportionately larger behavioural effects. HMRC, Direct effects of illustrative tax changes (June 2025)
Sources
- Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter), Key findings (2025-10-13; relevant passages checked)
- HM Revenue and Customs, Direct effects of illustrative tax changes (June 2025), Ready-reckoner table, 2027–28 (2025-06-24; relevant passages checked)
- HM Treasury, The Green Book (2026), Chapter 7 (distribution) (2026-02-05; relevant passages checked)
- Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter), Key findings (2025-10-13; relevant passages checked)
Source published October 2025 (IFS); June 2025 (HMRC); evidence reviewed 2026-10-04. Reconsider if: A Budget changes the tax baseline; HMRC publishes a new ready reckoner.
Also on: Revenue options — one shared record, so its cost is counted once.
Action 2A20Policy status: site-editorial action
Tie spending decisions to realistic outcomes and costs
Publish the cost of keeping present service standards and the outcome each budget is meant to buy, so reallocations name what is cut and what is gained, then compare forecasts with outturn.
The thread: issue, evidence, action
1. Issue Weakness: Those totals say how tight the budget is, not which spending is least valuable: the NAO finds spending decisions short-term and reactive, with evaluation too rarely used. Also: weakness, opportunity
2. Evidence Public sector net borrowing
3. Action A20, this action
Assessment (draft, 6 October review)
- A broad priority including this action (GRP-01): Deliver what is already funded
  Delivery RAG: AmberGate: pending
  Range if completed: 14.0–20.0 out of 30 (equal weights; not yet assessed: expected incremental benefit (Bn), incremental affordability (Co))
  National plan: Growth and prosperity list
Who decides:
HM Treasury and departments; Parliament (Estimates) (UK)
Evidence:
Expert or audit recommendation. Audit and appraisal guidance recommend the approach; no evaluation shows that it saves a stated sum.
Expected effect:
Direction plausible; size not established.
Cost and funding
Not yet costed
Funding: Not yet costed / funding not identified
Why it is shortlisted here: Restraint and reallocation already happen at every Spending Review; this makes the service forgone visible.
What it takes
The problem
Spending decisions are short-term and reactive, and debt interest and borrowing limit choices without saying which spending is least valuable.
Who is affected, and where
Users of public services and taxpayers across the UK. Territory: UK. Applies to UK departments; devolved governments set their own budgets within block grants, not assessed here.
Policy status
UK Facts proposal. Builds on existing practice: Spending Review 2025 set departmental budgets to 2028–29 and the Green Book (2026) and NAO recommend realistic costs and evaluation. A published “cost of current standards” baseline for each service is a UK Facts proposal.
The evidence
What the research found:
The NAO found a short-term, reactive approach with no cultural shift to long-term value for money, and recommended annual departmental and cross-cutting delivery plans and publication of completed evaluations.
Evaluated on:
UK central government spending reviews, 1998–2024; NAO audit synthesis
Our recommendation (separate from the research):
Publish service baselines and the cost of maintaining standards before each spending review; name the budget reduced whenever money is reallocated.
Strongest counter-evidence:
Planning documents can become paperwork; targets invite gaming; services whose savings are easy to measure may be cut ahead of more valuable ones.
Cost and funding
Cost completeness: Not yet costed. Funding: Not yet costed / funding not identified.
- Analytical and delivery capacity to publish service baselines and outcome measures (administration; paid by central government): Not yet costed. Existing staff time has an opportunity cost. Cash-releasing savings must be shown separately from service improvements.
Who pays:
HM Treasury and departments (analytical and delivery staff time).
Financing proposed:
None. No automatic savings are assumed; any reprioritisation must name the budget reduced and the service forgone.
Gap remaining:
Unknown: analytical capacity has not been costed.
What delivery needs
Skills:
Analysts, evaluators and finance staff.
Operational capacity:
Consistent cost and outcome data across departments.
Infrastructure:
None beyond data systems.
Permissions:
None.
Law:
None required.
Public consent:
Ministers accepting published trade-offs.
First step and stages
First step: Publish consistent baselines and the cost of maintaining present service standards for the next planning cycle. (owner: HM Treasury)
1. Agree service baselines and outcome measures — HM Treasury and departments (proposed stage, not an official timetable)
2. Use them in the next spending review — HM Treasury (proposed stage, not an official timetable)
3. Compare forecasts with outturn each year without rewriting the baseline — HM Treasury; NAO (proposed stage, not an official timetable)
Depends on: A47: one ledger of costs and funding; Departmental evaluation capacity
Trade-offs
Who gains and who loses:
Services with weak outcome data risk losing out; users of high-value but hard-to-measure services need protection.
What else the money or effort could do:
Analytical time spent on baselines is not spent on policy development.
Strongest counterargument:
Spending choices are political; better data cannot settle which outcomes matter most.
Risks:
Gaming, optimistic assumptions and cutting what is easy to measure.
How we would judge it
Baseline:
Debt interest £108.9bn and borrowing £134.3bn in 2025–26 (OBR databank).
Leading indicator:
Share of departmental budgets with published baselines and outcome measures.
Outcome:
Forecast-versus-outturn gaps in cost and outcomes; maintenance backlogs.
Continue, adapt or stop:
Review if published baselines are not used in allocation decisions within one spending review.
Earlier option on this page
This card replaces the option “Reprioritise or restrain spending” (operating: Departmental budgets to 2028–29 were set at the June 2025 Spending Review.). Its evidence: The 2010s offer an evaluated example: IFS found English councils’ central funding fell 46% in real terms, and per-person spending on culture, housing, planning and transport fell by over 40% while statutory services were protected. Restraint reduced borrowing but also reduced services, unevenly by place. IFS, How have English councils’ funding and spending changed? 2010 to 2024 (Report R318) · HM Treasury, Spending Review 2025 (11 June 2025)
Sources
- National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25), Summary paragraph 11 (2024-10-27; relevant passages checked)
- HM Treasury, The Green Book (2026), Chapters 6–9; affordability criteria (2026-02-05; relevant passages checked)
- National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25), Summary (2024-10-27; relevant passages checked)
Source published October 2024 (NAO); February 2026 (Green Book); evidence reviewed 2026-10-04. Reconsider if: The next spending review; New NAO work on spending frameworks.
Also on: /government — one shared record, so its cost is counted once.
Action 3A47Policy status: site-editorial action
Publish one funding ledger across all action plans
Connect every action to unique cost and funding records with years, price basis and status, so totals are shown only when compatible and gaps stay visible.
The thread: issue, evidence, action
1. Issue Opportunity (Policy scenarios): Validating the existing labs and linking every model to the same funding ledger as the action plans would let users compare options on one set of cost records.How acting here reaches it: One ledger across every action plan lets the costs on this page and the policy labs count each cost once, so the trade-offs priced here are not double-counted elsewhere.
2. Evidence Withdrawn workbench models meeting the publication standard
3. Action A47, this action
Assessment (draft, 6 October review)
Not assessed in the 6 October review; this action stays in the topic plan with its own evidence.
Who decides:
UK Facts editorial and data team; policy owners remain responsible for their own commitments (UK)
Evidence:
Expert or audit recommendation. An accounting control grounded in official appraisal guidance; not an intervention with an economic return.
Expected effect:
Direction plausible; size not established.
Cost and funding
Not yet costed
Funding: Not a direct public-spending programme
Why it is shortlisted here: An accounting control for this site: every action’s cost and funding counted once, with gaps left visible.
What it takes
The problem
Proposals often count the same money twice, add incompatible figures or treat tax proposals and growth effects as money in the bank.
Who is affected, and where
Readers of UK Facts, including journalists, officials and voters. Territory: UK. Covers every action on the site, whichever nation it applies to.
Policy status
UK Facts proposal. Implemented on this site in October 2026 as the policy-plan ledger, with automatic checks for duplicate allocation, invalid funding labels and incompatible totals.
The evidence
What the research found:
The Green Book separates social value from affordability and requires attention to additionality and optimism bias; the NAO recommends realistic costs and published plans.
Evaluated on:
Not applicable; This website
Our recommendation (separate from the research):
Validate before showing any total; refresh with each Budget or policy update; keep unknowns unknown, never zero.
Strongest counter-evidence:
A neat ledger can imply more certainty than exists; it cannot judge whether a policy is worth doing.
Cost and funding
Cost completeness: Not yet costed. Funding: Not a direct public-spending programme.
- UK Facts ledger implementation and maintenance (administration; paid by UK Facts): Not yet costed. Site budget; no public money. Policy totals are inherited from the records, never created from generic assumptions.
Who pays:
UK Facts (editorial and development time).
Financing proposed:
The site’s own budget; no public money.
Gap remaining:
Not applicable to public funding; site time is not separately costed.
What delivery needs
Skills:
Data and editorial staff.
Operational capacity:
Refresh after each fiscal event.
Infrastructure:
The site’s validation suite.
Permissions:
None.
Law:
None.
Public consent:
None.
First step and stages
First step: Record periods, price bases, amounts or ranges, allocation, conditions and existing uses for every cost on the site. (owner: UK Facts data team)
1. Validate records before publishing totals — UK Facts
2. Refresh after each Budget or Spending Review — UK Facts (proposed stage, not an official timetable)
Depends on: Every domain action’s cost records
Trade-offs
Who gains and who loses:
Readers gain clearer information; no direct distributional effect.
What else the money or effort could do:
Editorial time not spent on other pages.
Strongest counterargument:
Official bodies (OBR, departments) already publish costings; a site ledger can duplicate them.
Risks:
Spurious certainty; missing data shown as zero (guarded against by validation).
How we would judge it
Baseline:
Duplicate allocations and unmatched years flagged by the validator.
Leading indicator:
Share of actions with complete cost and funding records.
Outcome:
Traceable evidence for every figure; unresolved gaps visible.
Continue, adapt or stop:
Never publish a combined total while any material cost is unknown.
Sources
- HM Treasury, The Green Book (2026), Chapters 6–9; affordability criteria (2026-02-05; relevant passages checked)
- National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25), Summary paragraph 11 (2024-10-27; relevant passages checked)
- HM Treasury, The Green Book (2026), Affordability criteria (2026-02-05; relevant passages checked)
Source published February 2026 (Green Book); October 2024 (NAO); evidence reviewed 2026-10-04. Reconsider if: A Budget or Spending Review; A new domain plan is added.
Also on: /policy-impact — one shared record, so its cost is counted once.

Decision brief

Paying for £8bn a year: compare a tax rise, a spending cut and more borrowing on one baseline

The leading option set out as a decision someone could take: who decides, who benefits, the best evidence, cost and funding, and the main trade-off. The full research record is one click away.

Decision briefPublic-policy proposalReviewed 2026-10-04

Paying for £8bn a year: compare a tax rise, a spending cut and more borrowing on one baseline

The thread: issue, evidence, action

Issue Weakness: Debt interest was £108.9bn in 2025–26, 8.8% of public-sector receipts, and the state borrowed £134.3bn; debt stood at 93.3% of GDP. Also: opportunity
Evidence Public sector net borrowing; Debt interest, share of public-sector receipts
Action Show tax choices with their real trade-offs

Decision required: Before any new recurring commitment of about £8bn a year is made, HM Treasury sets out three ways to pay for it on the same OBR baseline and price year — 1p on the basic rate of income tax, a named reduction in departmental spending, or extra borrowing — with who pays, what is given up and how the cost recurs.
Who and where: UK taxpayers and users of the public services a commitment or a cut would affect. Applies in: UK.
Accountable body: HM Treasury
Intervention: Set out tax, spending and borrowing routes for the same recurring sum on one baseline and price year.
Best evidence, and where it applies: HMRC’s June 2025 ready reckoner: 1p on the basic rate raises about £6.9bn in 2026–27 and £8.25bn in 2027–28; the IFS finds broad-based rates the most straightforward way to raise large sums.Studied in: UK tax base in HMRC’s models (2026–27 to 2028–29 (forecast years, OBR March 2025 baseline)).
Extra cost of this change: Capital: none identified in the brief.Recurring: Modelling and publication of the three routes; HMRC administration of any tax change — Not yet costed.
Funding: Mainly a legal or regulatory change: administration costs still need a budget.Committed to this change: none.Possible source, not an award: none identified.Unfunded: None for the analysis; the commitment itself remains unfunded until one route is chosen and legislated.
Savings and wider benefits: Not yet specified: no cashable saving or avoided cost has been costed for this change. Expected outcomes are listed one by one in the research appendix and are never added together or counted as money available.
First 90-day step: A three-route comparison published alongside the 28 October 2026 Budget for each new recurring commitment of this sizeThe proposed first milestone; a 90-day date is not yet specified. Owner: HM Treasury. Proposed by UK Facts, not an official deadline.
Twelve-month milestone: Not yet specified.Time to a first useful result: At the Budget; outturn against the costing after the first full tax year.
Outcome, and when to scale or stop: Measure: Whether the Budget publishes the alternatives and names the budget that would be reduced.Scale if: Outturn is close to the costing and the chosen route’s losers were identified in advance.Stop if: A route is relied on twice for different commitments — the ledger then counts it once and shows the other commitment as unfunded.
Main trade-off: Each route has a loser: basic-rate taxpayers now, users of the service that is cut, or future taxpayers through higher debt interest.
Source and review date: Direct effects of illustrative tax changes (June 2025) (24 June 2025); Options for tax increases (IFS Green Budget 2025 chapter) (October 2025). Reviewed 2026-10-04.

An editorial proposal by UK Facts for discussion, not government policy. Records: A21 · effects E-A21-INCOMES · costs C-A21-MODELLING

Research appendix: study design, effect sizes and limits, alternatives, full costing, international comparisons and how we would know

1.The change, in plain words

Paying for £8bn a year: compare a tax rise, a spending cut and more borrowing on one baseline

2.The decision requested

Decision: At the 28 October 2026 Budget, publish for any new recurring commitment of this size the three financing routes side by side on the OBR baseline — tax (1p on the basic rate), a named departmental reduction, or borrowing — with incidence, recurring cost and the alternative given up, and choose one.
Accountable institution: HM Treasury
Geography: UK
Powers: Finance Act for any tax change (Scotland sets its own income tax rates and bands, and Wales part of income tax); Supply Estimates for spending; borrowing within the fiscal rules set in the Charter for Budget Responsibility.
Delivery partners: HMRC (costing and collection); Office for Budget Responsibility (certification); Spending departments (named reductions); Devolved governments (Barnett consequences)

3.Who it is for, and what changes beyond today

Target population: UK taxpayers and users of the public services a commitment or a cut would affect.
Eligibility: Any new recurring commitment of about £8bn a year from 2027–28 — the published yield of 1p on the basic rate — used as a common unit, not as a forecast need.
Scale: £8.25bn a year in 2027–28 (and £8.2bn in 2028–29) on HMRC’s published estimate.
Baseline: Debt interest was £108.9bn in 2025–26 (OBR databank). HMRC ready reckoner (June 2025): 1p on the basic rate raises £6.9bn in 2026–27, £8.25bn in 2027–28 and £8.2bn in 2028–29, after the behavioural responses HMRC models; OBR sensitivities: 1 point higher gilt yields add about £1.5bn to debt interest in the first year and £2.7bn the next.
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Aggregates (£bn)); HM Revenue and Customs, Direct effects of illustrative tax changes (June 2025) (Publication_Format sheet, row 6 (basic rate)); Office for Budget Responsibility, Economic and fiscal outlook ready-reckoners (consistent with the March 2025 EFO) (Sheet Debt_interest_RR)
Change beyond existing law or funding: Budgets already publish costings line by line, and the ready reckoner already exists. What is missing is the comparison of the alternatives for the same money on one baseline, naming the spending that would be cut and the interest cost of borrowing instead.

4.How it would work

Do: Set out tax, spending and borrowing routes for the same recurring sum on one baseline and price year Changing: so that the choice of who pays — taxpayers now, service users or future taxpayers — is explicit and the receipts are counted once

Lower disposable income for the taxpayers a tax route targets (basic-rate payers for 1p on the basic rate)
Modelled, not observedEffect record E-A21-INCOMES
HMRC and IFS costings are modelled; the distribution depends on the tax chosen and on the devolved position.
Less service from the departmental budget reduced, if the spending route is chosen
Hypothesis to test
Depends on which budget is named; no general estimate exists.
Higher future debt interest, if the borrowing route is chosen
Hypothesis to test
The size depends on gilt yields at the time; OBR sensitivities show how much interest moves with rates.

Outcomes are kept separate and never added into one impact figure.

5.Best evidence

Direct effects of illustrative tax changes (June 2025)
Author or institution:
HM Revenue & Customs
Published:
24 June 2025
Evaluation period:
2026–27 to 2028–29 (forecast years, OBR March 2025 baseline)
Design:
Modelled costing of small illustrative tax changes, including modelled behavioural responses
Sample or population:
UK tax base in HMRC’s models
Effect and uncertainty:
1p on the basic rate: £6.9bn (2026–27), £8.25bn (2027–28), £8.2bn (2028–29). For comparison, 1 point on employee National Insurance £5.3bn and 1 point on VAT £9.2bn in 2027–28.
Limits:
Illustrative and approximately linear only for small changes; the baseline predates later fiscal events; lines cannot be added together.
Where: Publication_Format sheet, rows 6–9, 26 and 76. Affiliation is provenance, not proof of quality.
Options for tax increases (IFS Green Budget 2025 chapter)
Author or institution:
Institute for Fiscal Studies (Green Budget 2025)
Published:
October 2025
Evaluation period:
Forecast period to 2029–30
Design:
Analysis of tax options using published costings
Sample or population:
UK tax system
Effect and uncertainty:
Broad-based rates are the most straightforward way to raise large sums; behavioural responses, interactions and devolved arrangements change net yields.
Limits:
An independent think tank’s assessment; it does not compare against named spending cuts.
Where: Key findings. Affiliation is provenance, not proof of quality.

6.Alternatives, counter-evidence and who loses

Closest feasible alternative: Spread the cost: a smaller tax rise plus some borrowing, or reprioritise within existing departmental totals without naming the budget cut.
Strongest counter-evidence: Higher taxes reduce household incomes and can weaken incentives; spending restraint or growth could close gaps without tax rises; manifesto commitments rule out some rates.
Source: Institute for Fiscal Studies, Options for tax increases (IFS Green Budget 2025 chapter) (Key findings); National Audit Office, Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) (Summary paragraph 11)
Distributional effects: Tax route: most workers and pensioners with income above the personal allowance pay, but not the lowest earners; spending route: users of the service cut, often lower-income households; borrowing route: future taxpayers, and today’s budgets through higher interest.
Main downside: Showing the alternatives side by side makes every option visibly costly, which can delay a decision that has to be made anyway.

The options compared, including current policy
Option	Who is reached	Evidence	Likely outcome and timing	Cost and funding	Main trade-off
The proposalTax route: 1p on the basic rate of income tax	Basic-rate taxpayers pay (the Scottish and Welsh positions differ)	HMRC ready reckoner (modelled)	About £8.25bn in 2027–28 if legislated for April 2027	Receipts, not spending; administration small	Lower take-home pay for most workers; manifesto constraint
AlternativeSpending route: reduce a named departmental budget by the same amount	Users of the service reduced	NAO: savings rarely evaluated; service effects depend on the budget	From the next Spending Review year	No new money; cost falls on service users	Hard-to-measure services risk being cut first
AlternativeBorrowing route: finance the commitment with extra borrowing	Future taxpayers	OBR debt-interest sensitivities	Immediate; interest cost grows each year the borrowing continues	Debt interest, sensitive to gilt yields	Uses fiscal headroom and raises exposure to rate rises
Current policyCurrent practice: costings published line by line, alternatives not compared	Same	Budget scorecards	No change	Existing Treasury time	The forgone alternative is invisible

The options compared, including current policy

The proposal
Tax route: 1p on the basic rate of income tax
Who is reached
Basic-rate taxpayers pay (the Scottish and Welsh positions differ)
Evidence
HMRC ready reckoner (modelled)
Likely outcome and timing
About £8.25bn in 2027–28 if legislated for April 2027
Cost and funding
Receipts, not spending; administration small
Main trade-off
Lower take-home pay for most workers; manifesto constraint
Alternative
Spending route: reduce a named departmental budget by the same amount
Who is reached
Users of the service reduced
Evidence
NAO: savings rarely evaluated; service effects depend on the budget
Likely outcome and timing
From the next Spending Review year
Cost and funding
No new money; cost falls on service users
Main trade-off
Hard-to-measure services risk being cut first
Alternative
Borrowing route: finance the commitment with extra borrowing
Who is reached
Future taxpayers
Evidence
OBR debt-interest sensitivities
Likely outcome and timing
Immediate; interest cost grows each year the borrowing continues
Cost and funding
Debt interest, sensitive to gilt yields
Main trade-off
Uses fiscal headroom and raises exposure to rate rises
Current policy
Current practice: costings published line by line, alternatives not compared
Who is reached
Same
Evidence
Budget scorecards
Likely outcome and timing
No change
Cost and funding
Existing Treasury time
Main trade-off
The forgone alternative is invisible

7.What other countries or the devolved nations show

No comparable evaluation found.

Searched: Evaluations of budget-presentation rules that require financing alternatives for new commitments: OECD budgeting reviews; the Netherlands’ coalition expenditure frameworks and CPB analysis; Sweden’s expenditure ceilings; independent fiscal institutions’ costing roles (OBR, Irish Fiscal Advisory Council).

Next step: Record, for each new recurring commitment in the 28 October 2026 Budget, whether a financing route and the alternative given up were published, and compare outturn with the costing in later years.

8.What delivery needs first

data — An up-to-date post-Budget baseline and a refreshed ready reckoner; the June 2025 figures predate later fiscal events. (Requirement; owner: HMRC and OBR)
law — A Finance Act for the tax route; a parliamentary vote on Estimates for the spending route. (Genuine veto: nothing proceeds without it; owner: Parliament)
public consent — Manifesto commitments limit which tax rates can rise, which may rule out the tax route as specified. (Genuine veto: nothing proceeds without it; owner: HM Treasury and the Cabinet)

9.What it would cost

How the cost is built up: Treasury, HMRC and OBR analytical time per fiscal event. The £8.25bn is the money being financed, not a cost of this proposal; the tax is paid by households.

Cost build-up: one row per component, with scope, unit, quantity, unit cost, type, price year, period, status and source.
Component	Unit and quantity	Unit cost or amount	Type, price year, period	Status
Modelling and publication of the three routes; HMRC administration of any tax changeUK fiscal packages on one baseline and price year	analytical time per fiscal event; quantity to be set from need and capacity	Not yet costed (ledger C-A21-MODELLING)	recurring; price year not stated; Each fiscal event	Not yet established

Modelling and publication of the three routes; HMRC administration of any tax change
UK fiscal packages on one baseline and price year
Not yet costed (ledger C-A21-MODELLING)
recurring; price year not stated; Each fiscal event; Not yet established

10.Who pays, and what is missing

Programme envelope (a possible route, not an award): None identified
Allocation committed to this change: None
Remaining gap: None for the analysis; the commitment itself remains unfunded until one route is chosen and legislated.
Proposed financing: This is the financing decision itself. Receipts from a tax route can pay for one commitment once; borrowing is not a funding source but a deferral to future taxpayers.
Responsible payer: households, central government
Budget displaced: Spending route: the named departmental budget. Tax route: households’ disposable income. Borrowing route: future budgets through higher debt interest.

11.First milestone and time to a useful result

A three-route comparison published alongside the 28 October 2026 Budget for each new recurring commitment of this size (Owner: HM Treasury. Proposed by UK Facts, not an official deadline.)

Time to first useful result: At the Budget; outturn against the costing after the first full tax year.

What could delay it: The Budget makes no new recurring commitment of this size HMRC does not republish the ready reckoner on the new baseline

12.How we would know

Baseline: Debt interest £108.9bn (2025–26); 1p basic rate £8.25bn (2027–28, HMRC June 2025).
Comparison: Each route’s costing against outturn: receipts collected, service levels in the budget reduced, or debt interest paid.
Leading indicator: Whether the Budget publishes the alternatives and names the budget that would be reduced.
Follow-up: Each subsequent fiscal event and the OBR’s forecast evaluation report.
Continue if: Outturn is close to the costing and the chosen route’s losers were identified in advance.
Adapt if: Receipts or savings fall short of the costing: re-cost on the new baseline before relying on them again.
Stop if: A route is relied on twice for different commitments — the ledger then counts it once and shows the other commitment as unfunded.
Thresholds: Not yet set: No published business case defines an acceptable shortfall; the OBR’s forecast evaluation is the comparison.

What is not yet known, and how to find out

What the three-route analysis costs per fiscal event (cost)Next step: Treasury to estimate analyst time from its existing scorecard process.Scope: Each new recurring commitment above the chosen size · Data or quotes needed: Analyst days per costing · Who can estimate it: HM Treasury
The debt-interest cost of borrowing £8bn a year on the latest baseline (data)Next step: Read the OBR ready reckoner’s borrowing line (the units of the published £10bn line need confirming) or ask the OBR; held until confirmed.
How receipts would differ in Scotland and Wales (data)Next step: Use HMRC and devolved costings for the devolved rates before publishing incidence by nation.

Sources last checked 4 October 2026 · Owner: Evidence editor (James Harris) · Next check: ONS public sector finances, UK: September 2026 (21 October 2026) or the first trigger: The next UK Budget, Spending Review or other fiscal event (no date confirmed when reviewed).

More decision briefs on other pages

Set realistic costs before spending, then manage the contracts that deliver the priorities to the result — the brief for “Tie spending decisions to realistic outcomes and costs”, on Public procurement

What it would take

The order things have to happen in, who pays, and the effects and appraisals on record.

The order things have to happen in

First, the prerequisite
Publish service baselines and the cost of current standards
Owner: HM Treasury and departments
No date: the timing depends on the steps before it.
Then, the decision
Choose between specified tax and spending packages on one baseline
Owner: HM Treasury; Parliament (Finance Act and Estimates)
No date: the timing depends on the steps before it.
Then, delivery
Legislate, collect and allocate; record each line once in the ledger
Owner: HMRC, departments; UK Facts for the site ledger
No date: the timing depends on the steps before it.
Finally, the measured outcome
Outturn compared with costings and service measures
Owner: OBR, ONS, NAO
No date: the timing depends on the steps before it.

Who pays, and what is still missing

Cost, committed funding and the remaining gap for the same scope and years. A programme envelope is not an award to a project; a proposal is not committed money. None of these costs has been established yet, so no total is shown.

Cost and funding ledger

Modelling and publication of specified tax packages; HMRC administration of any change
A21 · administration · not costed
Amount
Not yet costed
Who pays
central government
Committed
None identified
Proposed, not committed
—
Gap
Not established
Analytical and delivery capacity to publish service baselines and outcome measures
A20 · administration · not costed
Amount
Not yet costed
Who pays
central government
Committed
None identified
Proposed, not committed
—
Gap
Not established
UK Facts ledger implementation and maintenance
A47 · administration · not costed
Amount
Not yet costed
Who pays
UK Facts
Committed
None identified
Proposed, not committed
—
Gap
Not established

Cost and funding ledger
Cost line (action)	Amount	Who pays	Committed	Proposed, not committed	Gap
Modelling and publication of specified tax packages; HMRC administration of any change A21 · administration · not costed	Not yet costed	central government	None identified	—	Not established
Analytical and delivery capacity to publish service baselines and outcome measures A20 · administration · not costed	Not yet costed	central government	None identified	—	Not established
UK Facts ledger implementation and maintenance A47 · administration · not costed	Not yet costed	UK Facts	None identified	—	Not established

“Not yet costed” means no defensible cost has been found — not that the action is free. Lifetime benefits, benefit-cost ratios and forecast savings are never shown here as money available to spend.

Effects on record, with evidence ratings (1 record)

What the evidence says each action changes

Effects on record — these measure different outcomes, so they are not drawn on one scale
Action	Outcome and area	Effect	Compared with	Evidence
Show tax choices with their real trade-offs	Household and business incomes after tax Poverty and inequality · harm	Size not established	—	modelled; moderate confidence; United KingdomWho pays depends entirely on the package; the benefit side depends on what the receipts fund, counted once.

How we would know

Debt interest, share of public-sector receipts; Public sector net borrowing; Public sector net debt.

The outcome measures to watch. A baseline is where we start, not a target; where there is no official target we say so.

Debt interest, share of public-sector receipts
% of receipts · United Kingdom
Baseline
Not published
Latest
8.8%
2025–26
Target: none — no official target for debt interest; the fiscal rules target other measures.
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Aggregates (£bn) and Receipts (£bn)). Next release: monthly public sector finances; databank updated after each release (check the release calendar).
Public sector net borrowing
% of GDP · United Kingdom
Baseline
Not published
Latest
4.4%
2025–26
Target: none — the fiscal rules target the current budget and net financial liabilities, not headline borrowing.
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Aggregates (per cent of GDP)). Next release: monthly (check the release calendar).
Public sector net debt
% of GDP · United Kingdom
Baseline
35.5%
2007–08
Latest
93.3%
2025–26
Target: none — no official target for this measure.
Source: Office for Budget Responsibility, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 (Aggregates (per cent of GDP)). Next release: monthly (check the release calendar).

Where the ideas come from

Research, counter-evidence and methods (7 sources; 1 claim held back)

Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026 — Office for Budget Responsibility, September 2026.Official statistics (outturn and forecast); United Kingdom. Relevant passages checked, 2026-10-04.
The Green Book (2026) — HM Treasury, 2026-02-05.Official appraisal guidance. Relevant passages checked, 2026-10-04. Limits: Guidance; a positive benefit-cost ratio identifies no funding source.
Lessons learned: a planning and spending framework that enables long-term value for money (HC 234, Session 2024-25) — National Audit Office, 2024-10-27.Audit synthesis of NAO value-for-money work (HC 234, 2024–25); UK central government. Relevant passages checked, 2026-10-04. Limits: Written before the 2025 Spending Review; a published plan is an input to accountability, not a service improvement.
Exceptional Financial Support for local authorities for 2026-27 — Ministry of Housing, Communities and Local Government, 2026-02-23 (updated 2026-08-18).Government guidance (list of authorities); England. Full text checked, 2026-10-04. Limits: Support is permission to borrow or use capital receipts for day-to-day costs, not new grant. Counted from the page on 4 October 2026.
Options for tax increases (IFS Green Budget 2025 chapter) — Institute for Fiscal Studies (Stuart Adam, Isaac Delestre, Helen Miller), 2025-10-13.Fiscal and distributional analysis of specified tax options with indicative costings; United Kingdom (property taxes mainly England). Relevant passages checked (read from an Internet Archive copy), 2026-10-04. Limits: A pre-Budget options paper, partly overtaken by Budget 2025 (26 November 2025). Indicative costings are not comparable with each other or with today’s baseline without re-modelling.
Economic and fiscal outlook ready-reckoners (consistent with the March 2025 EFO) — Office for Budget Responsibility, March 2025 (corrected 17 March 2026).Official ready reckoner; United Kingdom. Relevant passages checked, 2026-10-04.
Direct effects of illustrative tax changes (June 2025) — HM Revenue and Customs, 2025-06-24.Official statistics (ready reckoner); United Kingdom. Relevant passages checked, 2026-10-04. Limits: Each line is a single change on HMRC’s baseline; lines cannot be added up, and larger changes have larger behavioural effects.

Counter-evidence and criticism

Show tax choices with their real trade-offs: Higher taxes reduce household and business incomes and can weaken incentives; mobile bases such as capital gains respond strongly; manifesto commitments limit which rates can rise. (Institute for Fiscal Studies)
Tie spending decisions to realistic outcomes and costs: Planning documents can become paperwork; targets invite gaming; services whose savings are easy to measure may be cut ahead of more valuable ones. (National Audit Office)
Publish one funding ledger across all action plans: A neat ledger can imply more certainty than exists; it cannot judge whether a policy is worth doing. (HM Treasury)

Claims held back

A thin forecast margin (headroom) can be overwhelmed by interest, demographic and growth shocks (brief threat, cited to the page) — The headroom figure in the March 2026 forecast was not re-checked in this review. Needed: Read the OBR March 2026 Economic and fiscal outlook headroom table; the threat is shown instead through the OBR’s interest-rate sensitivities.

“Full text checked” means we read the report itself; “relevant passages” means the sections behind each figure; “summary or abstract only” means we could not read the full study, so no number from it is published here without another source.

Other options compared — not on the shortlist (2)

Other options compared

Options from earlier work on this page that are not on the shortlist. They remain valid choices; their evidence is shown as before.

capacityStatus: external option
Raise the growth rate
Aims to:
Higher GDP, which raises receipts and lowers the debt ratio without rate rises.
How:
Investment, planning, skills and productivity policies raise output; a larger economy raises tax receipts and shrinks debt relative to GDP.
Who decides:
HM Treasury and every growth-facing department; the OBR judges the effect for forecasts.
Main constraint:
Productivity growth has been weak since 2008 across advanced economies; effects take years to appear.
Evidence:
Limited evidence — plausible mechanism, little direct evaluation
See the trade-offs and evidence
What the evidence shows
The arithmetic is well established: the OBR’s fiscal risks work shows debt ratios are very sensitive to the gap between interest rates and growth. Evidence that specific policies reliably raise trend growth is much weaker.
Resources
Varies by policy; public investment needs capital budgets.
Consent and decisions needed
Depends on the policy (planning reform, migration, investment).
Time
Years to a decade; the OBR usually phases in supply-side effects over its five-year forecast.
Cost and yield
Not a single costed option; see the growth pages for individual policies.
Trade-offs and who pays
Policies that may raise growth (more housebuilding, more migration) carry their own local and political costs.
How we would know it worked
Leading indicator: Business investment and productivity growth. Outcome: Trend growth and the debt ratio in successive OBR forecasts. It would not be working if: Growth forecasts are revised down despite the policies.
Sources
OBR, Fiscal risks and sustainability – July 2025
preventionStatus: operating
Reduce exposure to interest-rate and inflation shocks
Aims to:
A debt interest bill less sensitive to inflation and short-term rates.
How:
Issue fewer index-linked gilts so inflation spikes add less to interest; manage the maturity of new issuance; the Bank of England’s pace of selling its gilts (quantitative tightening) affects the net cost of the APF.
Who decides:
HM Treasury and the Debt Management Office (issuance remit); Bank of England Monetary Policy Committee (QT, independent).
Main constraint:
The stock of existing index-linked debt takes decades to roll off; investor demand constrains issuance choices.
Evidence:
Moderate evidence — evaluated, with limits on scope or transfer
See the trade-offs and evidence
What the evidence shows
The OBR’s ready-reckoner shows the exposure: 1 point higher RPI inflation adds about £7bn to interest in a year, and 1 point higher Bank Rate about £7.4bn. Reducing exposure lowers risk, but cheaper debt now is not guaranteed — the effect depends on rates when debt is issued.
Policy status
The share of index-linked gilts in new issuance has been reduced in recent remits.
Resources
None extra.
Consent and decisions needed
Treasury decision for issuance; QT is for the Bank of England, which is operationally independent.
Time
Gradual: only new issuance changes, so the profile shifts over many years.
Cost and yield
No official costing; the trade-off is between expected cost and risk.
Trade-offs and who pays
Conventional or shorter debt can cost more or refinance sooner if rates rise; index-linked debt is cheap when inflation is low.
How we would know it worked
Leading indicator: Index-linked share of new gilt issuance. Outcome: Smaller year-to-year swings in debt interest when inflation moves. It would not be working if: Interest costs remain as sensitive to RPI as now.
Sources
OBR, Economic and fiscal outlook ready-reckoners (consistent with the March 2025 EFO)
UK Debt Management Office, Gilt market: gross issuance and remit

The options side by side
Option	Resources	Time	Evidence	Outcome to watch
Raise the growth rate	Varies by policy; public investment needs capital budgets.	Years to a decade; the OBR usually phases in supply-side effects over its five-year forecast.	limited	Trend growth and the debt ratio in successive OBR forecasts.
Reduce exposure to interest-rate and inflation shocks	None extra.	Gradual: only new issuance changes, so the profile shifts over many years.	moderate	Smaller year-to-year swings in debt interest when inflation moves.

How this connects to the UK priorities

Previous version. These are the 4 October 2026 priorities (NP1–NP8), superseded on 7 October 2026. The national action plan is linked from each assessed option above.

From the previous version of the UK action plan (4 October 2026). A link here never adds to a priority’s evidence count.

Previous version. The 4 October 2026 slate, superseded; see the national action plan.
Outcome priority 5: Buy or build social-rent homes for households in temporary accommodation
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..
Outcome priority 6: Hold the new family hubs to what worked in Sure Start, starting where access is weakest
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..
- Provides evidence — findings here underpin UK-S2.
Outcome priority 2: Put employment support alongside healthcare for people who want to work
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..
- Provides evidence — findings here underpin UK-S2.
Outcome priority 4: Fix the coldest homes first, and check the work before it is paid for
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..
Delivery enabler 1: Publish what is ready to build — projects and housing sites — with each blocker’s owner and cost
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..
- Provides evidence — findings here underpin UK-W4, UK-O3.
Delivery enabler 2: Set realistic costs before spending, then manage contracts to the result
- Implements an action — A20 on this page.
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..
- Provides evidence — findings here underpin UK-W4, UK-O3, UK-T1.
Outcome priority 3: Fit home adaptations faster for older people most at risk of falling
- Carries a cost or trade-off — Public money for this priority comes from the budgets this page tracks..

Plan reviewed 2026-10-04. How we judge evidence.

How this connects

What could each tax option raise?
Design-specific yields for compliance, rate changes and wealth taxes, kept separate rather than added up.
Which big numbers are actually spendable?
Spending, unpaid tax, private profits and recovered losses are different kinds of money.
Why is social protection the biggest line?
The State Pension is the largest single item of social protection spending.
Try changing a tax yourself
A tax calculator to see how individual rate and threshold changes affect households.
A household calculator, not a costing of national yield.

Sources and methods (6)

OBR, Public finances databank (September 2026); outturn consistent with ONS/HM Treasury Public sector finances, 22 September 2026, sheets "Aggregates (£bn)", "Aggregates (per cent of GDP)" and "Receipts (£bn)" (released September 2026) — receipts, spending, borrowing, debt and debt interest (outturn and forecast)
OBR, Economic and fiscal outlook – March 2026 (forecast years) (released March 2026) — forecast years
HM Treasury, Public Expenditure Statistical Analyses 2026, Table 4.2 (released 16 July 2026) — spending by function
OBR, Economic and fiscal outlook ready-reckoners (consistent with the March 2025 EFO), sheet Debt_interest_RR (released March 2025 (corrected 17 March 2026)) — debt interest sensitivity to inflation, Bank Rate and gilt yields
IFS, How have English councils’ funding and spending changed? 2010 to 2024 (Report R318) (released June 2024) — council funding by deprivation, section 114 notices
HMRC, Direct effects of illustrative tax changes (June 2025) (released 24 June 2025) — illustrative tax yields in the options

Method notes

Financial years run April to March. The latest outturn year is provisional and ONS revises it for several months; this page moves to each new Databank edition automatically.
Debt interest is central government interest net of the Asset Purchase Facility, the OBR’s preferred measure. It excludes interest paid by local government and public corporations.
Public sector net debt excludes public sector banks (the headline ONS measure). The version excluding the Bank of England removes the effect of the Bank’s balance sheet, including its gilt holdings and lending schemes.
All £ figures are cash. No chart here compares a cash series with an inflation-adjusted one; long-run comparisons use shares of receipts or GDP instead.

The short version

Three key measures

From the annual budget to debt and future choices

Money in, money out

In 2025–26 the state spent £1,366bn, raised £1,231bn and borrowed the £134bn gap

Where the spending goes

Social protection and health take 49% of all public spending

Why interest costs change

Interest has been above £100bn for four years and is forecast to keep rising in cash terms

What changes debt relative to GDP?

Debt rose in three steps to about 93% of GDP and is forecast to edge higher

Who feels this most?

The most deprived councils lost more than twice as much funding per person as the least deprived

Visual summary

Go deeper

What could improve it?

Turn investment promises into a deliverable pipeline

Collect the tax already due

Close capital-tax reliefs rather than raise rates

Property and land tax reform

What would move the needle?

The options on the table

Assessed with another page as home

The position today

What we can build on Strengths

What is holding us back Weaknesses

What could improve things Opportunities

What could make it worse Threats

The actions worth examining

Show tax choices with their real trade-offs

The problem

Who is affected, and where

Policy status

The evidence

Effects on record

Cost and funding

What delivery needs

First step and stages

Trade-offs

How we would judge it

Earlier option on this page

Sources

Tie spending decisions to realistic outcomes and costs

The problem

Who is affected, and where

Policy status

The evidence

Cost and funding

What delivery needs

First step and stages

Trade-offs

How we would judge it

Earlier option on this page

Sources

Publish one funding ledger across all action plans

The problem

Who is affected, and where

Policy status

The evidence

Cost and funding

What delivery needs

First step and stages

Trade-offs

How we would judge it

Sources

Decision brief

Paying for £8bn a year: compare a tax rise, a spending cut and more borrowing on one baseline

More decision briefs on other pages

What it would take

The order things have to happen in

Who pays, and what is still missing

What the evidence says each action changes

How we would know

Debt interest, share of public-sector receipts

Public sector net borrowing

Public sector net debt

Where the ideas come from

Counter-evidence and criticism

Claims held back

Other options compared