Finally, tax and spend. One of Reeves’ biggest decisions was to tax more to pay for the NHS. The Chancellor has raised nearly £70bn in tax and spent 70% of it on higher day-to-day departmental spending. £9 in every £10 of the new money in her spending review went to the NHS.

How about living standards? With one good year & one bad, typical households are over £1,000 better off. Median incomes have grown an average of 2.2% a year – better than any whole Parliament average since 2010. But even before the Iran war, living standards growth looked weak over the next decade.

Second, Starmer & Reeves leave behind a weaker-looking labour market with unemployment climbing up to 4.9% (vs 4.1% when they took office) & the number of 16-24-year-old NEETs passing one million. There's lots going on here, but the decision to boost employer NICs in Autumn Budget 2024 hasn't helped

First off growth. Prior to the outbreak of war in Iran there were positive signs. Real GDP grew by 0.6% in Q1 2026, the highest in the G7 – although in recent years we’ve seen a pattern of strong Q1 growth followed by more disappointing results as the year wears on.

Some of the headroom estimates in this article look a touch optimistic to me. But we're all guessing at this point. One thing we can be sure of is that the Treasury's briefing to a new PM will not start "things are much better than people think actually". www.ft.com/content/c4ce...

What we didn’t hear today is how key trade-offs will be tackled. Local authority funding from central government is down 19% since 2010, as health and education have been protected. With defence spending set to rise too where is the extra money for local authorities coming from?

Third, the cost of essentials crunch has meant that high inflation since 2022 has disproportionately hit poorer families. Energy prices are 73% higher and food 47% higher than they were in 2016. At the same time, weekly earnings have only risen 51%, leaving households treading water.

Second, the UK's housing affordability crisis. The gap between local rents and support in the benefits system is close to a record high and needs addressing. Andy’s promise of a council housebuilding programme bigger than any post war would amount to a fivefold increase in completions.

Three of the issues Andy mentioned are central to addressing our living standards crisis. First, the million young people not in employment, education or training. More apprenticeships for young people must be part of the answer. The Growth and Skills levy should be ringfenced for under 25s only.

In truth, the peace dividend has been spent on the entire welfare state, not working-age social security. Recently the most dramatic increases have been in health. Since 1980, health spending has risen by 4.5% of GDP. Funding also came from low debt interest costs that have also recently reversed.

We could instead look at pensioner welfare, which has risen from 5.1% of GDP in the mid-80s to 5.9% now. (for more on pensioner benefits try our recent note on the rachet that is the triple lock - www.resolutionfoundation.org/publications... )

Since defence spending’s recent peak in the mid-80s non-pensioner welfare has grown from around 4.8.% of GDP to 5.1% now. Importantly, non-pensioner welfare is now about the level of the mid-90s, below its global financial crisis peak, but has seen some rise from its level immediately pre-pandemic.

Our answer is that we're there already. The best replacement is a 'smoothed' earnings link – tracking earnings growth but protecting against temporary price shocks without the permanent ratchet. The net saving would be ~£650m in 2029-30 if implemented next year and would grow over time.

And that progress mostly came before the triple lock. The intro of Pension Credit in 2003 helped drive a 15.8pp fall in pensioner poverty between 1997-98 and 2011-12. Since the triple lock was implemented, pensioner poverty has actually risen by 2.3pp.

@pjtheeconomist.bsky.social times column this week is an incredibly pithy (even by his standards!) summary of the issues and changes in working age welfare - including why spending on it isn't out of control.

Important report out today. Child poverty isn't just bad, it causes a lasting earnings penalty. Perhaps some gap is not so surprising. But I was shocked by the scale of the penalty persisting even for children who go to university, get the same degree and work for the same firm.

Not just Trump who's a year into a new job....clear highlight of my week so far. Tasted pretty good too.

Classic Budget week moment: you think you've got a great idea for a chart and then you discover the OBR have done it already. Beautiful illustration of the backloading at this event.

Grateful if the Minister for Pensions could keep the noise down...

3) Comparison of the relative impact of climate damage, climate mitigation costs and fuel duty loss. Striking how significant the costs to the public finances of a changing climate are, not just the more often discussed costs of getting to net zero and loss of fuel duty revenues.

2) Falling demand for UK gilts from the changing pensions landscape. Role of defined benefit pensions schemes in shaping the structure of the gilt market has been substantial over the last few decades. Forecasting exactly how their demise will impact it is hard, but a clear reminder of the scale.

1) Sensitivity of PSNFL (government's new debt metric) to shocks. Reminder there is still a debt rule that could bite on capital spending in the future. Loan valuation shock actually the one that hurts most because what matters for a debt falling rule is the slope of the line in the final year.

Great discussion this morning. Extremely striking chart to open today's report too - the end of low pay in Britain @nyecominetti.bsky.social

This chart shows how the government's affordable homes commitment compares to previous levels of funding. More than since the financial crisis, but slightly lower in real terms than under the last Labour government.

This chart shows the health picture. Real increase in RDEL through this spending review is £19bn. Health and social care takes £17bn of it.

This table confirms no change to the RDEL envelope, and a small reprofiling of the CDEL envelope - so basically spending review delivered within the totals Treasury had available.

This chart shows the implications for example if health settles at the rumoured 2.8%

In one chart - why a government focused on living standards for all would not have winter fuel U-turn as the priority.

Fascinating data for those into income distributions. Including nobody thinks they are rich.

The welfare cuts come in April 2026, but the detail reveals that the £1bn employment support that was promised in exchange is heavily backloaded. So only £200m of support is actually available for extra work support in the year the cuts come in.