What is the best available source of funding for the implementation of the proposed sustainable, cost-effective energy supply solution in the UK?

The UK is facing multiple major challenges including low economic growth, high general inflation, and an expensive energy supply which is both carbon intensive and exposed to third party cost and resilience risks.

Currently, the overall situation of the UK economy (ref. Appendix 1) prevents significant public sector funding being used to address these major challenges for a combination of reasons:

  1. Public Sector Net Debt (£2,632 billion exceeds 100% Gross Domestic Production (GDP; £2,573 billion) for the first time since the 1950s and it is continuing to rise;
  2. Public Sector Borrowing Requirement is over £150 billion in the current fiscal year;
  3. Bank of England (BoE) Base Rate is 5.0% pa and may rise further which results in incremental public sector borrowing being expensive;
  4. Sterling is relatively weak versus the major world currencies (i.e. US Dollar and Euro) which makes imports (including essential supplies of oil, gas and electricity via interconnectors) costly;
  5. Persistent high inflation is causing the BoE Monetary Policy Committee (MPC) to increase the Base Rate repeatedly to a high level and, potentially, to maintain it at a high level until CPI inflation falls to 2% pa which is significantly below its current level (8.7% pa in May 2023); and
  6. Total Government Receipts (from taxes and duties) and Expenditure are over 41% GDP and over 46% GDP which are their highest levels since the 1950s.

The previous Prime Minister (Liz Truss) and her Chancellor (Kwasi Kwarteng) attempted (Mini-Budget September 2022; ref. Appendix 6) to stimulate economic growth by borrowing up to approximately £50 billion per annum to fund a range of tax reductions. Despite the proposed incremental annual borrowing being less than 2% GDP, the market reaction was very severe.

The £ / $ exchange rate approached parity within days of the budget which is approximately 20% below its current level after most of proposed tax changes were subsequently cancelled. Banks and building societies immediately increased fixed interest rates on mortgages by up to 2% pa and withdrew up to half their fixed rate mortgages due to the uncertainty created by the budget.

The BoE was 'forced' to intervene (offering to buy up to £40 billion Gilts at a rate of £5 – 10 billion per day for a week with the aim of stabilising falling Gilt prices) in the Gilts market in order to avoid the collapse (caused by the need to implement fire sales of Gilts in a market with rapidly falling prices) of pension funds which owned LDIs (Liability Driven Investments) linked to Gilt yields.

The BOE also announced that it was prepared to increase the Base Rate rapidly to counteract the inflation which was expected from the implementation of the Budget announcements.

In summary, a relatively small (compared with GDP) unexpected increase in Public Sector Net Debt resulting from "unfunded" tax reductions caused a severe negative market reaction which could have had a catastrophic effect on an already weakened UK economy.

The Labour, Liberal Democrat and Green Parties’ current stated and expected policy proposals (ref. Appendices 2, 3 and 4 respectively) are likely to result in reduced medium to long term reduction in economic growth, higher inflation, higher interest rates, higher taxation and higher net public sector debt compared with a continuation of the current Conservative Party policies.

Long term historical key economic indicators show that increased public sector expenditure has always resulted in worsening performance of the national economy in the medium to long term after a possible short-term boost to economic growth due to increased public sector spending. This worsening performance is exacerbated when the starting position is a weak economy.

Appendix 5 shows the key components (including £6.4 trillion personal pension wealth) and total value (£15.2 trillion) of UK personal wealth in 2020. The total UK personal wealth has increased since 2020.

The Sustainable Party’s proposal for cost effective, resilient, 100% renewable energy policy requires at total investment over a 10- year duration transition period of approximately £1.8 trillion which equates to about 25% total UK personal pension wealth. This investment is expected to deliver an investment return of approximately 5% per annum over a 30-year time horizon.

Each community could perform a survey of all of its citizens to find out how many would be willing to invest 25% of their personal pension wealth in a regulated (by a new, rigorous UK regulatory agency) in a Sustainable Community Fund (SCF) to finance the implementation of the Sustainable Party’s energy policy proposal in their community.

If the first communities which set up SCFs succeed in delivering cost effective, resilient, 100% renewable energy are successful, then other communities are very likely to follow their lead.

Economic Impact of UK Political Party Manifestos:

Appendix 1

UK Economy – Key Indicators

GDP £2,504 bn (2022)

Public Sector Net Debt £2,500 bn (Dec 2022) i.e. 99.8% GDP

Public Spending forecast £1,189 bn (2023-24)

Public Sector Borrowing Requirement forecast £152 bn (2023 – 24) i.e. 6.1% GDP

Total Tax & Duties collected forecast £1,058 bn (2023-24)

Total Public Sector Wage Bill £243 bn (2022-23)

Interest on PSND £116 bn (2023 -24)

GDP Growth Forecast (OBR) 0.4, 1.8 & 2.5% in 2023, 2024 & 2025 respectively

Appendix 2

Labour Party Taxation Policy Proposals

  1. End non-domiciled tax status in UK so income tax charged on worldwide income. 68,300 individuals claimed non-dom status on UK tax returns in 2021. Non-domiciled residents in the UK (‘non-doms’) receive at least £10.9 billion in offshore income and capital gains each year, which they are not required to report to HMRC or pay tax on in the UK. Taxing this income could raise more than £3.2 billion in additional tax revenue each year (ref. Prof. Andy Summers LSE Law School 26 Sep 2022). On average, a non-dom using the “remittance basis” tax break has £420,000 in unreported income and capital gains. This is more than ten times their UK investment income and gains – which do not receive a tax break – highlighting the cost for investment in the UK. The current regime saves them more than £125,000 on average in income tax and capital gains tax each year. This figure already accounts for the alternative tax planning options a wealthy individual would pursue if non-dom status were not available.
  2. Charge 20% VAT on private school fees. Shadow Education Secretary Bridget Phillipson has stated that this policy would raise £1.6 bn pa.
  3. Increase scope of windfall tax on oil and gas company revenues. Labour is proposing an amendment to the Finance Bill that seeks to close three “loopholes” in the windfall tax. Analysis by the party found that changing the design of the levy would raise an additional £16.8bn. Autumn statement (2022) stated that the windfall tax will be raised from 25% to 35% and extended to the end of March 2028. The Chancellor also announced a new temporary 45% levy on electricity producers. And that the investment allowance included in the windfall tax would be decreased for the majority of investment expenditure, meaning companies can only reduce their windfall tax bill by 29% of funds invested. The discount – which is intended to encourage firms to invest in extraction in the UK – was previously 80%. The investment allowance is one of the three “loopholes” in the windfall tax that Labour has highlighted. The opposition estimates that scrapping the allowance would raise £10.6bn, based on analysis of Office for Budget Responsibility data. Labour has also urged the government to backdate the levy to cover excess profits made since January 2022 – a change it said would bring in £2.6bn of additional revenue – and to increase the rate of the tax from 35% to 38%, which it said would raise a further £3.6bn.

Labour Party Spending Policy Proposals

  1. Free pre-school childcare: Cost = £6 per hour x 4 million children (aged 0 to 4 years old) x 40 hours (i.e. 8 hours per day x 5 days) per week x 50 weeks pa = £12 bn pa.
  2. £28bn pa over 8 years i.e. £224 bn in total of green capital investment. Targets for spending would include gigafactories to build batteries for electric vehicles, the hydrogen industry, offshore wind turbines manufactured in Britain and more everyday infrastructure such as home insulation, cycle paths, tree planting and flood defences.
  3. Additional pay for public sector workers to resolve current strikes and to avoid future strikes by non-striking unions. Conservatively, this could result in additional wage increases of 5% pa on a total public sector wage bill of £250 bn in 2024 i.e. an additional £12.5 billion pa.
  4. Additional spending versus £1,189bn Public Spending forecast in 2023-24 of, conservatively, 5% pa i.e. £60bn pa for increased public sector headcount and other resources /”investment” (e.g. IT systems, social housing, hospitals, schools) plus additional “Social Protection” payments (including universal credit, unemployment, disability benefits and social care).

Appendix 3

Liberal Democrat Party Spending Policy Proposals (2019 Manifesto)

  1. Investing in schools: allowing schools to employ 20,000 teachers,
    reduce class-sizes and restoring funding to 2015 per pupil levels;
    ending the crisis in Special Educational Needs and Disabilities funding
    by halving the amount that schools pay towards the cost of a child’s
    Education Health and Care Plan; and introducing a clear and properly
    funded entitlement to genuinely high-quality professional
    development for all teachers.
  2. Tackling in-work poverty: ensuring that the welfare system incentivises
    people to work by reversing cuts to work allowances, introducing a
    new second-earner work allowance and increasing support for self-
    employed people.
  3. Health and social care: additional investment in priority areas, funded
    by the 1p increase in income tax: social care, NHS England (including
    mental health), public health and investing in the workforce.
  4. Early years and childcare: providing free, high-quality childcare for
    children of working parents from nine months and for all children aged
    2-4; investing in children’s centres; tripling the Early Years Pupil
    Premium; and, increasing statutory paternity leave from two weeks to
    six weeks.
  5. Introduce Skills Wallets for all adults: enabling an adaptable, future-
    focused workforce by giving every adult £10,000 to spend on education
    and training throughout their lives.
  6. Green transport: investing in green transport and encouraging people
    to use greener options; substantially increasing funding for buses so
    that new routes can be opened and old routes restored; promoting
    walking and cycling as options; and, freezing rail fares for five years
    while we make the rail system fit-for-purpose.
  7. Protecting the environment: increasing funding for the Defra and its
    agencies as well as water bodies so that they are all properly funded
    and provide funding for local government zero-carbon strategies.
  8. Police and crime prevention: providing enough funding for the police
    to hire two additional officers in every ward and to fund year-on-year
    salary increases.
  9. Further education, developing skills and youth services: investing in
    further education; introducing a Young Peoples’ Premium and
    investing in youth services.
  10. Extend free school meals: extending free school meals to all children in
    primary education and to all secondary school children whose families
    receive Universal Credit.
  11. Restore maintenance grants: reinstating maintenance grants for the
    poorest students, ensuring that living costs are not a barrier to
    disadvantaged young people studying at university.
  12. Tackling child poverty: making changes to the welfare system that will
    reduce child poverty by scrapping the two-child limit and the benefit
  13. Support for disabled people: reform the welfare system to better
    support disabled people by reinstating the Independent Living Fund
    and reversing cuts to the Employment Support Allowance for the
    Work-Related Activity Group.
  14. Making the welfare system fairer: other changes to the welfare system
    including increasing support for bereaved parents, scrapping the
    bedroom tax, linking Local Housing Allowance to average rents in an
    area and raising the amount people can earn before losing their
    Carer’s Allowance from £123 to £150 a week while reducing the
    number of hours’ care per week required to qualify for it.
  15. Other spending lines: introducing baby boxes, investing in legal aid,
    ending rough sleeping within five years, introducing a new Commercial
    Landowner’s Levy to replace Business Rates, regionalising the British
    business Bank, tackling violence against women and girls and domestic
    violence, young carer’s bus pass and support for refugees.
  16. Extra spending on defence and aid: because GDP/GNI will be higher if
    we stop Brexit, we will invest more in defence and aid to meet our
    commitment to spending 2% of GDP on defence and 0.7% of GNI on
  17. Additional funding for Scotland, Wales & Northern Ireland: this is the
    additional funding that would be available to Scotland, Wales and
    Northern Ireland for them to spend on their priorities. This will mean
    £3,400m additional funding for Scotland, £1,870m for Wales and
    £1,500m for Northern Ireland.

Liberal Democrat Party Spending Proposal Summary (£bn)

1 Investment in schools 10.56
2 Tackling in-work poverty 3.33
3 Health and social care 7.74
4 Early years and childcare 13.99
5 Introduce Skills Wallets for all adults 1.62
6 Green transport 2.61
7 Protecting the environment 1.33
8 Police and crime prevention 1.03
9 Further education, developing skills and youth services 1.65
10 Extend free school meals 1.16
11 Restore maintenance grants 0.94
12 Tackling child poverty 2.82
13 Support for disabled people 1.28
14 Making the welfare system fairer 2.0
15 Other spending lines 2.73
16 Extra spending on defence and aid 1.34
17 Additional funding for Scotland, Wales & Northern Ireland 6.79
Total Spending Proposals £62.92 bn


Liberal Democrat Party Taxation Policy Proposals

  1. Remain Bonus: the amount of extra revenue available due to GDP
    growth as a result of staying in the EU. This is the net figure and takes
    into account payments into the EU budget as well as money saved that
    would otherwise have been spent on the Withdrawal Agreement and
    replacing EU spending in the UK. LD would use the Remain Bonus to
    fund investment in schools (1) and to make work pay (2).
  2. One penny increase in income tax: money raised by increasing income
    tax by 1p, this money would be used to invest in health and social care
    services (3).
  3. Return Corporation Tax to 20%: current government spending plans
    are based on reducing Corporation Tax to 17%. LD would not proceed
    with this cut and instead would increase Corporation Tax to 20%. LD
    would put money raised towards funding its childcare offer (4) and
    introducing Skills Wallets (5).
  4. Abolish the separate Capital Gains Tax-free allowance: LD would
    instead tax capital gains and salaries through a single allowance. LD
    would put money raised towards funding LD childcare offer (4) and
    introducing Skills Wallets (5).
  5. Reform Air Passenger Duty: LD will reform the taxation of international
    flights to focus on those who fly the most, while reducing costs for
    those who take one or two international return flights per year. LD
    would use the money raised to invest in tackling the climate
    emergency by investing in green transport (6) and the environment (7).
  6. Cannabis duty and savings: income from introducing a legal, regulated
    market for cannabis and savings to the police and court system. LD
    would use the money raised through legalising cannabis to fund the
    police and youth services (8).
  7. Funding committed in spending review: funding that the government
    committed to in the September 2019 Spending Review and that LD assume
    that it would continue, rather than planning to make cuts to
  8. Anti-avoidance measures: LD will set a target for HM Revenue and
    Customs to reduce the tax gap and support that by investing in staff to
    enable them to meet it.
  9. Increase the Digital Services Tax: LD would increase the Digital Services
    Tax from 2% to 6%, ensuring that the tech giants pay their fair share.
  10. Abolish Marriage Tax Allowance.

Liberal Democrat Party Taxation Proposal Summary (£bn)

  1. Remain Bonus 14.3
  2. 1p increase in income tax 7.74
  3. Return Corporation Tax to 20% 9.95
  4. Abolish the separate Capital Gains Tax-free allowance 5.66
  5. Reform Air Passenger Duty 4.86
  6. Cannabis duty and savings 1.49
  7. Funding committed in September 2019 spending review 12.46
  8. Anti-avoidance measures 5.7
  9. Increase Digital Services Tax 1.03
  10. Abolish Marriage Tax Allowance 0.63

Total Value of Taxation Proposals £63.82bn

Taxation proposal nos. 1, 3 and 7 are no longer available and no. 8 is potentially unachievable (i.e. close to zero net benefit after incremental HMRC cost allowance) which would reduce

Total Value of Taxation Proposals to £21.41bn i.e. £41.51bn less than Total Spending Proposals

Liberal Democrat Party Capital Expenditure Policy Proposals (2019 Manifesto)

£130 billion package of additional infrastructure investment which will include:

  • £86 billion to tackle the climate emergency and protect the environment, including:

- Substantial additional investment in the railways – opening new routes and electrification.

- £15 billion for an emergency programme – helping to leverage additional private investment – to reduce energy consumption from buildings.

- Introducing a £10 billion Renewable Power Fund to leverage investment in renewables from the private sector.

- £5 billion to prevent floods and fund climate adaptation measures.

- A Natural Capital Fund to plant trees and protect habitats and wildlife.

- £5 billion of initial capital for a new Green Investment Bank.

  • A capital investment programme in schools and hospitals that will support capacity increases and modernisation.
  • Directly invest in house building to support our target of building 100,000 social homes per year.
  • Investment to achieve our target of 2.4% of GDP spent on research and development.

As part of its Regional Rebalancing Programme the LD ensure that at least £50 billion is spent on priorities outside of London and South East England.

Appendix 4

Green Party Spending Policy Proposals (2019 Manifesto)

The section below sets out how we will pay for the policies proposed in this Manifesto. The Green Party has set out its spending over ten years, in line with our proposed ten-year Green New Deal to put us on track to reducing our carbon emissions to zero by 2030. This extended time period reflects the scale of the change needed to fix our climate and fund our future. Investment and spending amounts are billion per year. Although exact rates of investment and spending may vary year from year (especially as policies are phased in), the average for each year after ten years will be the yearly figure given.

This is the manifesto of the Green Party of England and Wales. Separate sister Green parties cover Scotland and Northern Ireland. Many public services are devolved, with the Scottish Parliament, the National Assembly for Wales or the Northern Ireland Assembly taking responsibility. However, most decisions on government investment, expenditure and taxation are ultimately taken on a UK basis, this is a UK general election and, despite the fact that this Green Party covers only England and Wales, and to maintain consistency and comparability, all the figures in this chapter are UK figures.

Green Party - A Green New Deal

Operational Expenditure related to Universal Basic Income:

- Cost of proposed UBI regime (including supplements and free childcare)

Total: £86.2 billion.

To be met from tax changes and savings revenue.

Operational Expenditure not related to Universal Basic Income:

Investment in skills and training: £2 billion

Support to private sector to kickstart investment: £1 billion

Reduction in public transport fares: £3.5 billion

Upgrading cycleways and footpaths: £0.5 billion (admin costs)

Research and development for farming & forestry: £1 billion

Research into carbon capture technologies: £0.8 billion

Tree and forest planting: £0.7 billion

Total: £9.5 billion

To be met from tax changes and savings revenue

Green Party - Capital Expenditure

Upgrades to electricity grid: £10.4 billion

Improvements to energy storage system: £4.5 billion

Renewable electricity generation: £12 billion

Funding local authorities to better insulate all homes and deep retrofit of 1 million homes a year:

£24.6 billion

Funding local authorities to better insulate non-domestic buildings: £7 billion

Funding local authorities to create at least 100,000 new social homes a year: £10.2 billion

Research and development for industry: £6 billion

Industrial processes: £3 billion

Upgrading rail capacity, including electrification: £12.2 billion

Upgrading cycleways and footpaths infrastructure: £2.0 billion

Electric vehicles and infrastructure: £2.5 billion

Total: £94.4 billion

To be met from public borrowing


Green Party - Growing Democracy

Operational Expenditure:

Increasing direct funding to local authorities: £10 billion

Providing a climate adaption fund for local authorities: £3 billion

Funding local authorities to provide free social care at home for over 65s: £4.5 billion

Funding political parties and other smaller policies: £1 billion

Increasing international aid: £6.5 billion

Total: £25 billion

To be met from tax changes and savings revenue


Green Party - The Green Quality of Life Guarantee

Operational Expenditure

Increased funding for NHS, including increased nursing training: £7 billion

Increased funding for schools: £4 billion

Scrapping tuition fees and funding every student: £7.8 billion

Increasing adult education: £1 billion

Smaller policies: £1 billion

Total: £20.8 billion

To be met from tax changes and savings revenue


Additional revenue generated from savings (per year)

The below figures come from calculations made by Green Party Tax and Fiscal Working Group:

Savings from cancelling wasteful projects:

Scrapping Trident: £2.2 billion (an additional £0.2 billion of savings from this measure will be spent on costs of cancellation)

Scrapping the government’s road building programme: £5 billion

Scrapping HS2: £3.5 billion (an additional £0.5 billion of savings from this measure will be spent on

costs of cancellation)

Scrapping Help to Buy: £1 billion

Ending the NHS internal market: £2.3 billion

Savings from tackling social problems (we have assumed we will only be able to realise 30% of

long term savings in these areas in the first ten years):

Tackling poverty: £12.6 billion

Ending the war on drugs: £1 billion

Ending air pollution: £1.8 billion

Total extra revenue generated by savings: £29.4 billion


Green Party - Additional revenue generated from tax changes (per year)

The figures below come from calculations made by Green Party Tax and Fiscal Working Group:

Carbon Tax: £76.7 billion (excluding Carbon Tax revenue from farming sector, which is restricted for

spending on the farming sector only)

Simplifying income taxes: £21.7 billion

Increasing Corporation Tax to 24%: £12 billion

New taxes on banking: £5 billion

Tax avoidance and evasion crackdown: £3 billion

Reduction of tax relief on pension contributions (all relief at 20%/basic tax rate): £6 billion

Reduction of tax-free drawdown on pensions to £40k: £2 billion

Legalised drug taxes: £8 billion

Increased alcohol duties: £3 billion

Minus VAT reduction for leisure, eating & drinking out, sports, recreation, creative arts &

entertainment and household repairs sector (£9.5 billion)

Minus increase in Employment Allowance from £3k to £10k (£3.5 billion)

The Green Party has not added any increase in revenue from its reforms to land taxes to its revenue predications. This is because, whilst the new Land Value Tax will bring in increased revenue, the Green Party is committed to using the initial extra revenue generated to mitigate the impact of the new tax on homeowners. This transition period, and the associated reliefs to help homeowners move to the new system, will last for ten years.

Total extra revenue generated by new tax regime: £124.4 billion

Green New Deal – additional private sector investment

The Green Party envisions that Green New Deal public sector investment will be a catalyst for private sector investment, as private investors seek to share in the financial rewards of a transition to a low carbon future. The Green Party has budgeted (see Green New Deal Operational Costs) for the administration of a fund to encourage and help direct this private sector investment. This private investment will form a second, non-publicly funded stream of finance for a Green New Deal.

The Green Party expects the amount of private investment to reach £50 billion per year, including around £25 billion of private sector finance matching public sector spending on deep retrofitting homes. Private investment will also benefit the Green New Deal for energy and the Green New Deal for industry, accelerating progress in these sectors.

Green Party - Public borrowing

The Green Party proposes to borrow an extra £94.4 billion a year, to pay for capital expenditure. The Green Party’s commitment to write off student debt from fee loans accumulated under the £9,000 tuition fee regime will add an additional sum onto the national debt.

The Green Party believes that the costs of servicing the extra borrowing and paying down the debt over time will be met by the additional revenue from the new jobs created and the surplus left over from our tax changes and savings revenue. Until recently, the cost of government borrowing was at its lowest for decades, creating an unparalleled opportunity for public investment.

The Green Party believes that that this borrowing to invest is justified, in the face of the looming Climate Emergency, and prudent, given how Green New Deal investment will kick-start an economic and social regeneration. The proceeds of this investment will in time mean that the Green New Deal pays for itself.

The rate of the Carbon Tax will rise through the Green New Deal period, with the reducing amounts of carbon in the economy taxed at an accelerating rate to encourage further phasing out. At the end of the Green New Deal period the extra revenue from the jobs, rented homes and transport assets created by New Deal investment will make themselves felt – replacing Carbon Tax revenue in the long term and providing a healthy surplus. This will form a stable foundation for future finances.

Our programme of investment should be seen as a starting push on our national bicycle – giving us the momentum to set off and pedal with growing strength towards a better future.

Green Party - Drawing it all together

This Manifesto proposes extra operational expenditure of £141.5 billion a year, paid for by a mix of tax reforms and savings measures. The Green Party proposes £94.4 billion of capital expenditure, raised through government borrowing. The Green Party believes that the surplus from its tax reforms and savings measures, alongside increased revenues from the new jobs created, will pay for servicing and paying down this extra borrowing.

The Green Party appreciates these are large numbers. It is, however, confident in them. The Green Party believes that it has been deliberately cautious in our estimates. It has not included in full the increased revenues that the government is likely to receive from an economy boosted by significant investment, or the reduced spending requirements arising from a happier, healthier society. These benefits are likely to accrue at an accelerated rate as our policies begin take effect, paving the way in the long term for an economy and that is far more stable than the current UK economy.

The Green Party believes that its investment will kick-start the great transition to a net zero carbon economy and a better quality of life. If not now, then when?

Appendix 5

UK Private Wealth

Latest figures from Credit Suisse in 2021 show there are approximately 685,500 Britons in the richest 1%, with a total wealth of £2.8 trillion.

The total amount of wealth in the Great Britain is £15.2 trillion. [ONS - March 2023].

  • The average household net worth in the UK is £302,500.
  • The average UK salary is £31,285, while the average net worth per person is £172,000.
  • UK household wealth has tripled in the past 20 years.
  • The largest component of the total wealth is the private pension wealth (£6.4 trillion; 42% total wealth).
  • Property wealth accounts for 36% of Great Britain’s total net wealth —about £5.5 trillion.
  • Financial wealth accounts for 13% of Great Britain’s total net wealth —about £1.9 trillion.
  • Physical wealth accounts for 9% of Great Britain’s total net wealth —about £1.4 trillion.
  • People over 65 have the highest net worth in the UK.
  • The wealthiest 10% of households hold 43% of all the wealth in the United Kingdom.
  • The wealth of the richest 1% of households in the UK was more than £3.6 million per household on average. 

Household wealth in the UK has increased by almost £10 trillion in the past 25 years — from £4.9 trillion in 1995 to £15.2 trillion by 2020. This was primarily driven by falling interest rates, especially for pensions and housing, which account for most assets.

Physical wealth includes the estimated value of all household contents, including vehicles, land, furniture, property, appliances, and the whole array of satisfaction-generating physical goods.

After adjusting to inflation, the total private pension wealth in the UK was £6.1 trillion from April 2016 to March 2018, up from £3.6 trillion from July 2006 to June 2008.

There is approximately £1.7 trillion in DB (Direct Benefit) pension scheme assets on UK companies’ balance sheets.

The total value of homes in the UK was £8.7 trillion by the end of 2022 according to estate agent Savills. Bank of England data shows that outstanding mortgage debt was £1.7 trillion, so Britons own approximately £7 trillion of housing wealth. 

Appendix 6

September 2022 UK Mini-Budget – Kwasi Kwarteng (Chancellor) & Liz Truss (Prime Minister)

Major measures by cost over 5 years




£ millions

National Insurance increase reversal



Corporation Tax cancel increase



Energy bills support 2022–23



Cost of living support announced May 2022



Stamp Duty reduction



Income Tax remove 45% rate band



IR35 easing



Income Tax from 20% to 19%



Annual Investment Allowance increase



VAT free shopping



No clawback on previous energy support



Alcohol Duty freeze/reform



Dividend Tax increase reversal



Venture/Employee share schemes reform



Measures rescinded by 14 October in light blue

Measures rescinded by next chancellor in violet

a Domestic energy support ran to Sep 2024, but only first 6 months was costed


The mini-budget, also known as "The Growth Plan", was designed to boost economic growth through tax cuts, which would be paid for by increasing the United Kingdom national debt. The package, worth £161 billion over five years plus £60 billion for the 2022–2023 energy bills support package, would have represented the biggest tax cut in the UK since the 1972 "dash for growth" budget of Anthony Barber. The budget also set an annual growth target of 2.5%. The Guardian observed that in spite of the number of measures announced in the statement (which involved much greater amounts than in some budgets), HM Treasury had described the statement as a "fiscal event" because the Office for Budget Responsibility had not been asked to provide analysis of the measures announced.

The Resolution Foundation calculates that the mini-budget cost the nation £30bn, the Truss government caused roughly that amount of the fiscal hole which the Treasury claims is £60bn. The Resolution Foundation estimates that Truss and Kwasi Kwarteng lost £20bn through unfunded cuts to national insurance and stamp duty, and another £10bn were lost through raised interest rates and government borrowing costs as the markets reacted to the budget.

Key points - The key points announced in the mini-budget were as follows:

  • Cut in the basic rate of income tax to 19% from April 2023, instead of April 2024 as previously announced (withdrawn on 17 October)
  • The 45% additional rate of income tax to be abolished for the highest earners in England, Wales and Northern Ireland from April 2023 (withdrawn on 3 October)
  • From 6 November, reversal of the 1.25% rise in National Insurance introduced in April 2022
  • Plans to introduce the Health and Social Care Levy from April 2023 scrapped
  • Plan to scrap an increase of corporation tax from 19% to 25% in April 2023 (withdrawn on 14 October)
  • Around 120,000 more people on Universal Credit to be asked to look for more work or face benefit sanctions
  • People over 50 will be given more time with job coaches to help them find work
  • Repeal of 2017 and 2021 reforms to IR35 anti-avoidance tax legislation governing off-payroll work (withdrawn on 17 October)
  • Annual tax-free corporate investment allowance to remain at £1m indefinitely
  • Regulations change to allow pension funds to increase UK investments
  • Tax relief for investors, allowing new and start-up companies to raise up to £250,000 of investment
  • Maximum share options for employees doubled from £30,000 to £60,000
  • Stamp duty threshold lifted to £250,000 with immediate effect (£425,000 for first time buyers)
  • A two-year freeze on energy bills that will cost an estimated £60bn over six months, and is forecast to reduce inflation by 5% (reduced to six months on 17 October)[36]
  • The limit on bankers' bonuses is scrapped
  • Re-introduce VAT-free shopping for overseas visitors, extended to visitors from EU] (withdrawn on 17 October)
  • Scrapping of planned increases in the duties on beer, cider, wine and spirits
  • Plans for investment zones in England, with 38 initially proposed
  • Liberalising of planning laws and scrapping of EU planning regulations

The Chancellor also announced the closure of the Office of Tax Simplification, effective when the next Finance Bill receives Royal Assent.

Market Reaction:

1. Currency, Interest Rate & Debt

On 23 September, and following the mini-budget, the pound sterling fell sharply in response to the government's planned spending increases and tax cuts, losing 3% against the US dollar and dropping below $1.09. It also fell 0.75% against the euro. On 26 September, sterling reached an all-time low against the dollar, dropping to $1.0327, its lowest since Decimal Day in 1971. As a result, the probability of pound–dollar parity by the end of 2022, a situation when £1.00 is worth $1.00, increased to 60%. Following a slight recovery, it fell again on 28 September to $1.05. On 30 September, and after another slight recovery, the pound fell again, to $1.1082, following an emergency meeting between Truss, Kwarteng and the Office for Budget Responsibility, and when the Treasury resisted calls for the early publication of an OBR forecast. On 3 October, and following Kwarteng's announcement of a reversal of the plans to scrap the higher rate of income tax, the pound rose to pre-mini-budget levels, reaching $1.13, before dropping slightly to $1.12. The following day it rose to $1.14 after Kwarteng's announcement that an Office for Budget Responsibility report would be published "shortly". On 11 October the pound again fell, reaching a two-week low, after Andrew Bailey, the Governor of the Bank of England, confirmed the end of a scheme to buy government bonds, before settling at $1.10. On 13 October the pound recovered after Sky News reported government discussions were taking place about possible changes to the their fiscal plan, reaching a one week high of $1.12540. Stocks and bonds also recovered following the reports. By the next day it had reached $1.13 amid speculation of a possible reversal of the policy, but dropped to $1.12 again after a hastily arranged press conference at which Truss announced the reversal of plans to scrap the raise in corporation tax. The pound strengthened after Hunt reversed the majority of the planned tax cuts on 17 October, rising to $1.13, and ended the day at $1.14. Following Rishi Sunak's appointment as prime minister on 25 October, Sterling rose to $1.149, its highest level since mid-September.

On 26 September, and in a bid to calm the markets, the Treasury announced that Kwarteng would publish a medium-term fiscal plan on 23 November and that the UK's fiscal watchdog, the Office for Budget Responsibility, would produce a forecast, both giving more details of how the measures would be costed. On the same day the Bank of England said it would "not hesitate" to raise interest rates and was "monitoring developments closely" but would not meet again to decide on interest rate levels until November. The following day the Bank's chief economist, Huw Pill, said it would have to deliver a "significant monetary policy response".

On 27 September, banks and building societies withdrew some mortgage products amid concerns about an increase in the interest rate. Virgin Money and the Skipton Building Society stopped mortgage offers for new customers, and the Bank of Ireland halted all new mortgage offers. Nationwide Building Society announced increases in its fixed rate mortgages by between 0.90% and 1.20% from the next day.

By 29 September, 40% of mortgage products had been withdrawn from the UK market. By 5 October, the interest rate on a typical two-year fixed-rate mortgage had risen above 6% for the first time since 2008. On 1 November, the Nationwide Building Society reported the turbulence caused by the mini-budget had led to a 0.9% fall in house prices during October, the first fall in UK house prices for 15 months, and the largest since June 2020 during the COVID-19 pandemic.

On 2 October, The Sunday Times reported that Kwarteng had attended a party on the evening of 23 September at which he had discussed aspects of economic policy with hedge fund managers, who might gain from a crash in the pound, and who had allegedly "egged him on". Conservative Party Chairman Jake Berry, who attended the same party, rejected claims such a conversation took place.

Speaking to the Treasury Committee on 18 October, Sir Jon Cunliffe, a deputy governor of the Bank of England, told MPs that the Bank had not been prewarned about the contents of the mini-budget: "We did not have a full briefing of the package the night before. Had they asked us what the market reaction would be, we would have interacted with them." Appearing before the House of Lords Economic Affairs Committee on 29 November, Andrew Bailey, the Governor of the Bank of England, also described how the Bank had been unaware of the contents of the mini-budget, even though a member of the Treasury was present at a meeting of the Monetary Policy Committee the day before, telling Peers, "I don't think Treasury officials were clear what was going to be in [the mini-budget]".

2. Bond markets

Ian King of Sky News observed that the prospect of a large surge in government borrowing caused a sharp rise in the bond market, where yields on gilt-edged securities immediately rose significantly. Borrowing costs on five-year government bonds experienced their largest increase in a single day on record as traders sold off UK assets. The Treasury announced it would ask the Debt Management Office to raise an additional £72bn in gilt sales in 2022. King described Kwarteng's strategy as "high-risk, high-reward" and "unashamedly seeking to pursue growth" but said that the bond market was concerned about "this amount of fiscal loosening at a time when there is monetary tightening being carried out by the Bank of England".

In response to this bond market volatility, the Bank of England announced on 28 September that it would begin to buy UK government bonds on a temporary basis for the following two weeks to calm the market,[ doing so because certain types of pension funds were at risk of collapse, with Sir Jon Cunliffe, the Bank's Deputy Governor, later describing some as being a matter of hours from being wound up. The Financial Times reported that many pension funds were using liability-driven investment derivatives to manage the risk of future interest rate changes, and this forced the funds to provide cash as additional collateral when gilt prices fell sharply. In turn, this led to forced selling, depressing bond prices further before the BoE intervened.

The bank planned to buy £5bn of gilts per day with a maturity of at least 20 years, and by 10 October had offered to buy £40bn worth of bonds, though it had actually bought £5bn worth. Kwarteng's 10 October announcement that he intended to bring forward the date on which he would set out his spending plan from 23 November to 31 October caused further volatility in bond markets. Also on 10 October, the Bank of England announced new measures aimed at ensuring an "orderly end" to its scheme of emergency bond purchases, due to end on 14 October. The measures included doubling the amount of bonds it could buy from £5bn a day to £10bn a day in the scheme's final week, and putting in place extra support to ease future pressure on pensions. According to the Pensions and Lifetime Savings Association, many of its member funds called for the bond-buying program to be extended until Kwarteng's new spending plan was released on 31 October. But as the bank stepped in to buy more bonds on 11 October, Governor Andrew Bailey reiterated that the scheme would end as planned. The bank also warned of a "material risk" to financial stability as markets continued to experience turmoil.

The cost of government borrowing across several bonds rose on 14 October after Kwarteng was sacked as Chancellor and Truss announced a reversal of plans to cut corporation tax. Interest on government bonds fell on 17 October as Chancellor Jeremy Hunt announced a reversal of the majority of the tax cuts outlined in the mini-budget, but it remained higher than when Truss took office. Following Sunak's appointment as prime minister on 25 October, gilt yields returned to pre-mini-budget levels, with 30-year gilt yields falling to 3.68%.

3. International response

On 27 September, the International Monetary Fund (IMF) took the unusual step of issuing a statement in which it openly criticised the plans, saying "the nature of the UK measures will likely increase inequality". The IMF, which acts to stabilise the global economy and sound economic warnings, suggested the government's fiscal plan, due at the time to be published on 23 November, gave it an opportunity to "re-evaluate" tax measures, "especially those that benefit high income earners".

On 28 September the global credit ratings agency Moody's described the plans as being "credit negative" and warned they "could more permanently weaken the UK's debt affordability". Moody's subsequently lowered the UK's economic outlook to "negative", doing so on 21 October, and amid what it described as "risks to the UK's debt affordability". as well as "heightened unpredictability in policymaking amid weaker growth prospects and high inflation" and "risks to the UK's debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility".

On 16 October, U.S. president Joe Biden said: "I wasn't the only one that thought it was a mistake. I think that the idea of cutting taxes on the super-wealthy when ... I disagree with the policy, but it's up to Britain to make that judgment, not me." Other world leaders and world media also criticised the mini-budget and Truss's economic policy. In late September, the French Minister of Economy Bruno Le Maire noted that the quick rise in interest rates on UK bonds was all the more important that the country's exit from the European Union had made it lose financial credibility on the markets.

  1. Business and economic

The statement was broadly welcomed by business groups, including right-wing think tanks such as the Adam Smith Institute, the Centre for Policy Studies, and the Institute of Economic Affairs, but economists questioned whether the plans were affordable. Mark Littlewood, director-general of the Institute of Economic Affairs, hailed it as a "boost-up budget" and said it was "refreshing to hear a chancellor talk passionately about the importance of economic growth". Tony Danker, Director of the Confederation of British Industry welcomed the reforms to planning and infrastructure: "Today is day one of a new UK growth approach. We must now use this opportunity to make it count and bring growth to every corner of the UK." Kitty Ussher, chief economist of the Institute of Directors, also welcomed the budget, describing it as "a good news day for British business". Lisa Hooker, consumer markets lead at PricewaterhouseCoopers, felt the tax reductions "should help the consumer longer term" while "short-term energy cost support is important". There were some concerns among the business community. Steven Alton, CEO of the British Institute of Innkeeping, said the statement did not address "the vulnerability of our small pub businesses in every community", while Stephen Phipson, CEO of Make UK, welcomed the statement for including a number of "positive measures" but warned it was the sixth growth strategy in a decade, saying this had resulted in "zero certainty" for businesses.

Paul Johnson, director of the Institute for Fiscal Studies, described the plans announced in the statement as a "big gamble", with money being injected into the economy while inflation remains high. A commentary piece in The Guardian described the statement as "a naked exercise in redistributing wealth upwards" and commented that "it is more or less impossible to find an economist who supports the government's approach, or an economic model able to justify it" David Page, head of macro research at Axa Investment Management, described the statement as "clearly something that suggests a significant amount of extra gilt borrowing, but at the same time, it's fiscal stimulus during a period when the Bank of England is already worried about aggregate demand being too high, and it's highly likely to force the Bank of England to raise rates even more than we thought they were going to otherwise". George Saravelos, global head of foreign exchange research at Deutsche Bank AG warned the UK's currency was "in danger" and suggested markets were treating it like a developing economy. Former United States Secretary of the Treasury, Larry Summers, described the UK as behaving like an "emerging market turning into a submerging market", a view echoed by Nouriel Roubini, who was one of the economists who predicted the 2008 financial crisis, who warned that UK investments were trading "like an emerging market" and drew comparisons with the events that led to the 1976 sterling crisis when the UK was forced to ask the International Monetary Fund for a financial bailout.[93] Samuel Tombs of research firm Pantheon Economics suggested the fall in the value of the pound could increase the cost of living by 0.5% in 2023. Two economists who did voice their support for the measures were Patrick Minford, a former economic adviser to Margaret Thatcher who Truss had cited as her inspiration, and Gerard Lyons, Truss's external economics adviser. Minford argued it had already resulted in stable inflation, moderate interest rates and higher growth, and suggested Truss and Kwarteng "could have banged the drum harder" in its defence, while in an article for the Sunday Express published on 25 September, Lyons said "While all governments want higher growth, few take the actions needed to achieve this. Truss is different." However, Minford later said that he believed the Office for Budget Responsibility should have been involved in the mini-budget in order to reassure the markets, while Lyons subsequently said he had been "very clear" about warning both Truss and Kwarteng of the potential impact of their plans.

The Institute for Fiscal Studies said the Chancellor was "betting the house" by putting government debt on an "unsustainable rising path". Kwarteng rejected suggestions he was gambling with the economy, and suggested the economic policy pursued by the Second Johnson ministry was more of a gamble, saying: "What was a gamble, in my view, was sticking to the course we are on. So, what we had to do was have a reboot, a rethink." Danny Blanchflower, who sat on the Bank of England's Monetary Policy Committee for three years, questioned the credibility of both Truss and Kwarteng, describing their actions as "raging incompetence". Charlie Bean, a former member of the Office for Budget Responsibility and Bank of England deputy governor, suggested the government's three-year plan to reduce debt as a percentage of GDP would lead to a shortfall of £60bn to £70bn. The £60bn figure was also cited by the IFS, which suggested government borrowing would reach £100bn by 2026, when it had previously been forecast to be around £30bn, and that a solution to this high figure would be to implement cuts in government spending. But Truss maintained the policies can be introduced without spending cuts. The IMF said the plans outlined in the mini-budget would increase growth in the short term, but "complicate the fight" against rising prices.

Writing after Truss had announced her resignation as Prime Minister, William Keegan, a former Economics Editor of The Observer, suggested that Truss's plans were based in part on "a misunderstanding of Thatcherism and its attitude to taxation". He highlighted the 1979 budget, delivered at the start of Thatcher's premiership by Chancellor Geoffrey Howe, which had introduced substantial tax cuts, reducing the top rate of tax from 83% to 60% and the basic rate from 33% to 30%, but offset them with an increase in VAT from 8% to 15%. "The shock and horror that greeted Truss and co was not just that they planned unfunded tax cuts but that they were borrowing to finance them, and the proceeds were going to those who least needed them. After a decade of austerity, this was the last straw, offending even the prospective beneficiaries."

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