Paul Johnson is the current director of the IFS, and has written a book covering all aspects of fiscal policy: how the government raises revenue through tax and what it spends it on. The aim is to provide – as the author puts it – an explanation of where the money comes from, where it goes to, how that has changed over time and how it needs to change in the future. If you do nothing, you will be auto-enrolled in our premium digital monthly subscription plan and retain complete access for 65 € per month.

The book also allows us to link together income and expenditure in a fairly useful way. For example, national insurance receipts very nearly equal the spending on the health service. I find that a useful piece of information because the NI system was originally supposed to fund the NHS. The obvious implication is that if we want to raise the funding for the NHS, we will need to raise NI levels. Equally, the author assumes that the current structure may not change. We might ask, however, how sustainable the structure might be with ever increasing amounts of debt being added to the existing pile? There is little to help that conversation in this book.If you want to understand why crazy politics routinely trumps economic rationality in government choices, read this’ Robert Peston It provides a clear explanation of the main sources of tax income, split between the various forms of tax, along with a variety of other income sources. What I particularly liked was the sense of scale that it brought to the analysis. For example, income tax brings into the Exchequer about 34 times more than inheritance tax. Or VAT brings in about 10 times capital gains tax. I see this as an important comparator when talking vaguely about tax policy. Government decisions determine the welfare of the poor and the elderly, the state of the health service, the effectiveness of our children's education, and how prepared we are for the whether that is a pandemic or global warming. As a society, we are a reflection of what the government spends.

For any student prepping for a job at the Bank of England or the Treasury, Johnson’s book will prove invaluable. It provides not just a treasure trove of killer facts but also the sort of opinions that would go down well in an interview: different, but without really breaking with the conventional wisdom about what is and what isn’t possible when it comes to government money and how to spend it. Paul Johnson and the enormously respected Institute for Fiscal Studies aim to hold Government to account - without which politicians will get away with their half-truths, elisions and dubious claims. Finally, it's great to see a well-deserved shout-out to Steve Webb for revamping the state pension and introducing DC freedom of choice; but there's still work to be done on UK pensions. Let's be more frank that DB members have it really good (and indeed better than was probably originally intended), and think about ways to improve the new DC world we live in for the current workforce generation. Higher default DC contributions? Is CDC the answer? And is there more that we can do with existing DB assets? I could posture on these all day (let me know if you fancy a coffee or beer 😉), but at the very least the status quo is surely not enough. This is a book to rave about, but not unconditionally. It sets out to describe the public sector in figures - how much is raised from what and how much is spent on what. In doing that, it works really well.

Government decisions determine the welfare of the poor and the elderly, the state of the health service, the effectiveness of our children's education, and how prepared we are for the future: whether that is a pandemic or global warming. As a society, we are a reflection of what the government spends. If you want to understand why crazy politics routinely trumps economic rationality in government choices, read this' Robert Peston

The book has some interesting ideas – a call for the long overdue reform of council tax, a flat-rate VAT, the devolution of more power over spending to local authorities – and the chapter on post-school education is excellent. But it doesn’t really break new ground, pushing up to the boundaries of orthodoxy but never beyond them. However, this is a step too far for the book. It takes pains to describe what is and to steer clear of what ought to be. I see this as a weakness because it suggests that we live in the best of all possible worlds. This is a view widely touted by the UK Civil Service, but it is far from the mark. After all, politics is all about shifting priorities in spending and income. The book provides some good source information to fuel these discussions, without actually stating the preferences of the author. The same form of approach is taken to the expenditure side. It threw up a number of surprising conclusions for me. For example, expenditure on working age benefits and credits is broadly the same as the state retirement pension. That suggests to me that the old canard about young workers funding the lifestyles of old pensioners is not entirely based upon fact. Taxpayers are also funding those of working age.

The book comes highly recommended, it's a huge achievement and should be mandatory reading for anyone interested in politics, or the broader issue of financing and running the country.

The book is an historical account of income and spending in 2022-23. In setting it out, it highlights the strengths of the Treasury approach, but also it's pitfalls as well. The account is not forward looking, other than vague reference to future events, such as increasing number of Boomers retiring. There is a sense of where we have been, but not much sense of where we are heading. This allows for some misleading conclusions to arise. One large impending budget item that the author has missed is the cost of servicing the public debt. In some forecasts, debt servicing in two or three years time will be larger than the defence budget. Change the plan you will roll onto at any time during your trial by visiting the “Settings & Account” section. What happens at the end of my trial? Johnson’s big selling point is that being non-aligned means he can speak truth to power. “In all we do, we try to be objective. We are determinedly independent, we have no axe to grind and certainly no political affiliation.” It is true that he has disobliging things to say about almost every chancellor of the past 30 years, Labour and Conservative. But the left-leaning tax expert Richard Murphy says you can’t really be apolitical if you accept – as he says the IFS does – “all the assumptions of neo-classical economics”. You may also opt to downgrade to Standard Digital, a robust journalistic offering that fulfils many user’s needs. Compare Standard and Premium Digital here.

For cost savings, you can change your plan at any time online in the “Settings & Account” section. If you’d like to retain your premium access and save 20%, you can opt to pay annually at the end of the trial. For example, there are those who might say that inheritance tax only raising 1/34th of income tax is wrong. They might argue that inheritances from rich people to their heirs ought to raise a larger amount of income. The numbers suggest that even if the inheritance tax take was doubled, after allowing for avoidance and mitigation schemes, it would only allow, for example, a 12% increase in the schools budget. Not to be sneezed at, but not a significant amount, either. You may be tempted to write this off as the fluffy work of economic models but it's not. It's about the actual money that Britain collects and then spends on itself, starting with the biggest items and working down the list. It first looks at income, then expenditure. Both subjects are fascinating, not least because we live in a country that is centuries old, and has operated continuously throughout that time despite all the things happening in the nation, as well as in the wider world. Consequently, we have a bizarre hodgepodge of a financial system that is radically different in many ways from what you would come up with if you had to invent the United Kingdom from scratch. On the spending side, again more long-term and consistent direction is needed: Education and social care is woefully underfunded. Attempts at levelling up poorer regions are laughable. The NHS too, which is great in theory but isn't all as great in practice (and probably suffers from exactly the pedestal that it's placed on), has been hampered significantly by the current government's attempts at improvement (that have arguably made things worse). Iron out issues to improve Universal Credit, but let's not change the whole welfare system again. 🏥💷 Government decisions determine the welfare of the poor and the elderly, the state of the health service, the effectiveness of our children’s education, and how prepared we are for the future: whether that is a pandemic or global warming. As a society, we are a reflection of what the government spends.