With COVID-19 continuing to exert significant strain on the UK, public spending has taken centre stage. Government borrowing recently reached record highs, and the combination of the furlough scheme, additional healthcare expenditure, and a loss in tax revenue has put enormous pressure on state finances. In the latest research by Redfield & Wilton Strategies, we asked the British public about their views on the UK Government’s financial position and strategy going forward.
A plurality (47%) of Britons think the UK Government has not managed its finances well in recent years. Meanwhile, 36% think the Government has managed its finances well, and 16% of respondents don’t know. In fact, a majority of Britons (58%) think the UK Government is in a financial position where it cannot afford to take on more debt. By contrast, around a fifth (22%) say the Government is in a position where it can take on more debt, and a similar proportion (20%) are unsure of their view.
Interestingly, we observe a gender difference in responses to this question: women (61%) are more likely than men (54%) to say the Government cannot afford more debt and, conversely, less likely (17%) than men (27%) to say it can afford more debt.
Additionally, those who think the UK Government has managed its finances well in recent years are slightly more likely to say it can afford to take on more debt (28%) than those who think the Government has not managed its finances well (19%). Nevertheless, a clear majority (58%) of this demographic feel that the Government’s position is such that it cannot take on more debt, which points to widespread agreement on the precariousness of the UK’s debt level, even among those who approve of the Government’s financial performance.
Indeed, the British public broadly favours financial stability over economic growth dependent on borrowing. When asked which the Government should prioritise with regard to public income and expenditure in general, half (51%) of respondents—including 57% of 2019 Conservative voters and 48% of 2019 Labour voters—say ‘balancing finances to ensure financial stability, at the risk of slowing down economic growth.’ This proportion is higher than the 32% who say the Government should prioritise ‘spending to encourage economic growth, at the risk of taking on too much debt.’
In order to balance finances, more Britons favour spending cuts (42%) than tax increases (37%), but a significant portion (21%) are unsure of their view, indicative of the complexity of this question.
Support for increasing taxes over cutting spending broadly rises with age, from 26% of 18-to-24-year-olds to 48% of those aged 65 and over. By contrast, young Britons tend to prefer spending cuts as a method for balancing the budget, with 51% of 18-to-24-year-olds saying the Government should rely on spending cuts, compared to 32% of 55-to-64-year-olds and 33% of those aged 65 and over. These trends are consistent with our polling last month, which found lower levels of support for increasing taxes among younger respondents, perhaps due to their generally weaker financial position.
However, we have seen a shift over the last month with regard to Britons’ views on taxation in general. Currently, a plurality (45%) says the Government should maintain taxes at their current level—up from 34% last month—whereas 24% think the Government should raise taxes (down 10%), and 23% think the Government should lower taxes (up 1%).
Similarly, a plurality (42%) of Britons would like government spending to be maintained at its current level. However, those who do think a change is needed in government spending are more likely to say spending should be lowered (30%) than raised (18%).
When it comes to the effects of the coronavirus pandemic on public finance, Britons appear divided. Overall, 36% support personally paying more tax after the coronavirus crisis, 35% oppose this prospect, and 25% neither support nor oppose it. Significantly, those in opposition tend to feel more strongly about the idea, with 19% strongly opposing it. Among those who say they would support paying more tax, the majority (62%) say they would support paying 1% to 3% more than what they currently pay, while 31% would support paying 4% to 6% more. Just 6% of respondents would support paying 7% to 10% more.
If taxes need to be increased in order to pay for the coronavirus pandemic, respondents most frequently say they would favour an increase in capital gains tax (32%), a response given by pluralities of both 2019 Conservative voters (32%) and 2019 Labour voters (30%). This is followed by a preference for increases in income tax (21%), national insurance (15%), inheritance tax (9%), and pension tax (3%). One fifth (20%) of respondents don’t know which tax they would elect for an increase.
If any of these taxes needed to be increased to pay for the pandemic, around half say income tax (54%) and national insurance (47%) should increase by a small amount, but significant portions (30% and 39%, respectively) think these taxes should not increase at all. An equal proportion think that inheritance tax should increase by either a small amount (35%) and not increase at all (35%). The highest resistance is against increasing pension tax, with a majority (60%) of respondents saying pension tax should not increase at all.
When asked to identify the specific area of public spending they would prefer to see decreased if such a measure were necessary to pay for the pandemic, Britons displayed the greatest preference for decreasing spending on national defence (18%), followed by infrastructure (13%), transportation (13%), and welfare/social security (12%), with relatively minimal support for decreasing spending on education (9%), healthcare (7%), or policing (6%). 15% are unsure which area they would elect for a decrease in spending.
Noticeable political divisions exist on this question. Whilst a plurality (23%) of 2019 Labour voters identify national defence as their preferred area for spending cuts, only 12% of 2019 Conservative voters agree. Instead, the most popular response among Conservative voters is cuts to welfare/social security (16%), which ties with the proportion who say they don’t know which area they would choose.
This partisan trend continues when respondents were asked by how much public spending in these specific areas should decrease. Whilst 50% of 2019 Labour voters say welfare spending should not decrease at all, this proportion falls to 37% among their Conservative counterparts, who are more likely to say that such spending should decrease by a small amount (36%), a moderate amount (18%), or even a significant amount (10%). Likewise, a plurality of Labour voters (38%) say national defence spending should decrease by a small amount, whilst a plurality of Conservative voters (49%) say it should not decrease at all.
Altogether, it appears that the British public is acutely aware of the financial strain the coronavirus pandemic has exerted on the UK Government. Many people feel that the Government has not displayed good financial management, and that levels of national debt cannot afford to grow further. A desire to balance the budget and achieve financial stability is widely visible, though Britons are less united on the best way to do so. In fact, there is broad support for maintaining both taxes and public spending at their existing levels.