Tax and spend decisions: did austerity improve financial numeracy and literacy?

Abstract

Democracy requires public understanding of the numbers underpinning tax and spend decisions. Austerity is the programme of government cuts in the UK since 2010. One might have expected this to have directed attention to political arithmetic and through improved public financial knowledge to have enhanced UK democracy. The flow of information has been deepened by the Office of Budget Responsibility, Whole of Government Accounts and the activism of the National Audit Office and the Commons Public Accounts Committee. In principle, the public could know more. Such developments sit comfortably with political commitments to restrain the state and sharpen its accountability and effectiveness. Yet austerity itself was necessitated by reference to ‘magical’ numbers – about spending and debt -- and aided and abetted by media mishandling of fiscal data. The decade from 2010 has also seen government ministers resist transparency in tax affairs, abandon financial accountability in health (in England) and condone the drying up of data across a swathe of social policy, especially welfare and education. It is hard to say that on balance the ‘fiscal conversation’ is any better informed. If ending austerity and assent to higher tax depend on better public understanding of numbers, prospects do not look bright.