Three things you need to know to communicate the public finances

Originally published by the OECD here: Three things you need to know to communicate the public finances

Britain’s annual Budget isn’t until 26^th November but has already been dominating headlines for months. In my former role as Fiscal Director at HM Treasury, the weeks leading up to the Budget involved the occasional late night as we ironed out the final details. Now, as Chief Executive of the Resolution Foundation, it’s the night after the Budget that will lose me the most sleep as our economists work overnight to unpack the details of the Chancellor’s announcement.

The Resolution Foundation is a think-tank dedicated to lifting living standards in the UK. We are independent and not affiliated with any political party. We advocate for evidence-based policy changes that we think will improve living standards particularly for low and middle income households. While at the Treasury, I followed strict rules on impartiality and public appearances; at Resolution it’s my job to take a position in key policy debates and make that position heard. Our aim is to reach both ‘experts’ and the broader public, all at once.

I have entered the public realm at a time of intense political and economic debate in the UK: a high cost of borrowing and low growth rates are really biting on politicians’ ability to meet expectations for public services. On top of this the UK – much like many other countries – is seeing a decline in public trust in institutions.

This makes my new role as a public-facing economist all the more challenging and all the more-important. Bringing the public into fiscal debates which directly impact their living standards is crucial for building trust in economic institutions and fostering the open and informed debate central to our democracies. But speaking to a general audience requires a different approach. So, here I want to share three of my reflections on navigating public communication in the past year.

1. How big is a billion?

Most of us understand ‘a billion’ is a big number, but it seems fewer of us can say just how big it is. Polling conducted around the time of last year’s Budget found that most people in Britain didn’t know how many millions were in a billion.

Even if we know how big a billion is in theory, conceptualising it is far from easy. My kids enjoy counting to a hundred, and sometimes contemplate trying a thousand on a very long car journey. If they kept going for the whole holiday (11 days) they could get to a million. But a billion takes more like 32 years (my son disputes this estimate which assumes each number takes a second, which of course requires some abbreviation at best). We rarely deal with billions in a way that gives us an instinctive sense of quantity.

But the task of economic commentators is to explain how big a billion is. Numbers have to be put in context, otherwise they will remain very large unknown quantities.

Good communication involves giving our audience a framework to understand Government spending announcements – to explain what £1 billion means for the public finances, and what that means for them.

(And in fairness to the 17 per cent of Brits who said ‘a million million’, they weren’t always wrong…)

2. How big is a budget?

UK Government spending in 2024-25 sat at about £1.28 trillion. But the same set of polling as above found that, when asked, the public had very different conceptions of how much was spent each year. Without knowing the baseline for Government expenditure – whether overall or for a specific area – the public’s ability to understand and engage with a key part of democratic governance is limited.

In our analysis of fiscal events, we’ve been looking at new ways of bringing our research to a wider audience. In our response to the Chancellor’s Spring statement in March, we modelled how proposed changes to certain welfare payments would impact different family types. From this we developed example ‘case studies’ that we shared on social media. And in our response to the Chancellor’s June Spending Review we used our distributional modelling of the ‘in-kind’ benefits households receive from public services to give cash figures for how people across the distribution would benefit from the announcements.

3. How rich are the rich?

Wealth taxes have become a hot topic in the UK, and appear to have strong support. But who exactly counts as wealthy? As the chart below shows, how much respondents thought someone had to be earning to count as ‘rich’ (in blue) is quite different from where earners actually sit on the income distribution (in green).

This is an example of where public perception can come into direct conflict with policymaking. Taxing the top 10 per cent of earners more would mean targeting anyone earning £75,000 or above – but only 35 per cent of people think that’s enough income to make you rich. At the same time, the public interest in this issue means there is an opportunity to inform public debate.

Conclusions: the public are paying attention

I’m conscious that the examples I’ve shared could be construed as putting public economic literacy in a bad light. But people understand that there are trade-offs in policymaking, and they have an awareness of the state of the public finances. Strikingly, in the same polling from around the 2024 Budget, over 70 per cent of respondents said they would be concerned if the Government started to borrow a lot more money.

People want to understand how their government is spending public money and what that means for them. Helping them to evaluate spending decisions and the trade-offs means taking a different approach to communication that doesn’t assume economic knowledge but does trust in the public’s desire – and capacity – to engage in these debates.

In my view the best communication will understand and speak to its audience but will also have a clear purpose. At the Resolution Foundation we accept the need for fiscal constraints as part of a policy programme that prioritises shared growth and rising living standards. I’m fortunate to have joined an organisation where clear communication and rigorous analysis are its bread and butter, and that has spent a long time building institutional trust. We do this not for the sake of ‘impact’ in the abstract, but because everyone at Resolution is dedicated to our core mission of raising living standards for British families.