Public Happy with Level of Government Spending but Unsure on How to Offset it

July 17, 2020
R&WS Research Team
Coronavirus | Economic Policy | Health | Tax | The Economy | UK Government

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Last week, the Institute for Fiscal Studies (IFS) forecast that the United Kingdom’s deficit will surge beyond £300bn, therefore exceeding the size of the UK economy and becoming the highest level of debt since the Second World War. Redfield & Wilton Strategies conducted two polls this week and last week to determine whether this extraordinary level of government spending had the public’s backing, and how the public would prefer to offset this deficit as the UK economy attempts to recover from the coronavirus pandemic.

Our research found that a strong plurality of 49% believe the Government is currently spending the right amount of money. Support for the current rate of spending was noticeably higher among those who voted Conservative in 2019 (64%), but a clear plurality (39%) of 2019 Labour voters also agree that the Government is currently spending the right amount. Among those Labour voters who disagree about the current level of spending, they are almost evenly divided between wanting the Government to spend more (25%) or less (20%), suggesting the Government has succeeded in finding a middle ground.

The public’s support for the current levels of Government spending may be linked to their views about the challenges of facilitating an economic recovery in the aftermath of the pandemic. A clear majority (56%) are not optimistic that the UK economy can recover quickly from the coronavirus crisis when the lockdown measures have ended. Therefore, the public may believe that high levels of Government spending are needed in order to save the UK economy. 

In terms of how the public would like to fund this increase in Government spending, a plurality (37%) favoured higher taxes. Interestingly, differences in opinions of Conservative and Labour voters were limited. Labour voters were only 3% more likely to support raising taxes than Conservative voters, equally as likely to raise borrowing, and four per cent less likely to support cutting spending.

Only 14% of respondents favoured reducing public spending. The Government has clearly recognised a return to austerity would be deeply unpopular – Boris Johnson himself ruled out reducing government spending last month.  Notably, there was limited differentiation in the views of the public on increasing or reducing spending depending on who they voted for in 2019: just 16% of 2019 Conservative voters and 12% of 2019 Labour supporters are in favour of reducing public spending.

However, when the question was framed in a different way in our poll this week, directly pitting higher taxes against spending cuts, responses were noticeably different. Support for cutting public spending rose to 34%, only four per cent lower than support for raising taxes. Although aggregate results varied, cross-party agreement remained, with only a 4% difference between Conservative (35%) and Labour voters (31%) in terms of their support for reducing Government spending. Thus, while people are disinclined to favour ‘austerity’ in the abstract, they are significantly more likely to support it when the alternative is higher taxes.

Meanwhile, Rishi Sunak’s recent announcement of a temporary stamp duty holiday to stimulate the housing market is supported by a clear majority (55%), while just 16% oppose the policy.  Nevertheless, the impact of this strategy in terms of boosting the economy will be relatively limited, and it is highly likely that this policy will have to be accompanied by one, or a combination, of the less popular aforementioned strategies.

However, although it would be relatively unpopular, raising taxes may not be an electorally damaging decision.  An overwhelming majority (71%) expects to face an increase in tax rates, irrespective of whether they actively support a tax raise, whereas only 7% believe a rise in tax rates is unlikely.

Likewise, our poll last week identified that the public has a strong belief that consumers have a duty to do their part to support the economic recovery, as recent Government messaging has suggested. A majority (58%) think that it is their duty to spend money on local businesses, while just 15% disagree.

Overall, there is limited public consensus as to the optimal strategy for economic recovery. It is likely that the Government’s policy choices will be met with scepticism, even though expectations of a smooth and quick recovery are low. Although the public does not support raising taxes, it is also against reducing Government spending, which may mean that raising taxes and borrowing money would not be a politically damaging strategy. The public has supported the Government’s economic decisions to this point, demonstrated by public approval of the furlough scheme, the reduction in stamp duty, and current levels of spending. Despite other aspects of its crisis management facing public criticism, it seems the economy may be one area of the Government’s handling of the crisis for which it currently retains popular support.

To find out more information about this research contact our research team. Redfield & Wilton Strategies is a member of the British Polling Council and abides by its rules. Follow us on Twitter

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