Public spending likely ‘to rocket' in next Parliament

The Resolution Foundation has said that government spending is likely to head back towards levels seen in the 1970s over the next Parliament, regardless of which party wins the General Election.

The think tank claims that both Labour and the Conservatives were planning big increases in the size of the state, despite ‘huge questions’ over how either would pay for it.

The 1970s are often described as a period of economic turmoil for the UK with public spending soaring during the decade. The Resolution Foundation has based its estimates on what the main parties have promised to date, as well as the underlying trends affecting the UK economy, and said that a return to those levels is likely.

The research said that if the Conservatives won and simply maintained current spending levels - which were recently raised - then public spending as a share of the economy was likely to climb to 41.3 per cent by 2023-4. This would be above the average of 37.4 per cent seen in the two decades running up to the financial crisis of 2007-8, and ‘marginally’ below the 42 per cent seen between 1966 and 1984.

If Labour won the election, the think tank said government spending as a share of GDP was likely to rise to 43.3 per cent by 2023-4. That assumes the party would re-commit to the £48.6 billion of extra spending it promised in its 2017 manifesto, while investing billions extra in capital infrastructure projects.

Matt Whittaker, deputy chief executive of the Resolution Foundation, said: "After an unprecedented decade of austerity, both main parties are gearing up to turn the spending taps back on. Whichever party wins is going to face huge questions about how they are going to pay for Britain's growing state. The fact is that whatever promises are made over the course of this election campaign, taxes are going to have to rise over the coming decade."