Working less and scrolling more

Afternoon all,

The printing-presses never stop at RF Towers – we’ve published four briefings since I last appeared in your inbox, ranging from day one frights to half-measures on poverty reduction (more on that in Chart of the Week…).

The Budget-heads among you will surely have already signed up to our pre-Budget briefing on Tuesday, with a focus on housing coming the week after. We’ll be weighing up the speculation so far in Something for the Weekend.

Have a great weekend – Happy Halloween!

Ruth

Chief Executive
Resolution Foundation

Y’all street vs. Wall Street. Texas’s GDP grew 3.3 per cent annually over the last quarter century – well above the US average of 2.1 per cent. Its share of national output is now higher than New York State’s at 9.3 per cent. Nearly one-in-five new American jobs over the past five years landed in Texas, particularly in tech, finance, and high-value manufacturing. Dallas bagged so much finance talent that locals nicknamed it “Y’all Street”. What’s the appeal of the Lone Star State? Perhaps the lack of a corporate tax… Whatever the reason, the boom has attracted young workers – Austin’s 25-29 cohort expanded by *62 per cent* over the last decade. And yet, price-to-income ratios for housing have remained below the US average, with the state issuing 15.3 per cent of all US housing permits last year. The lesson? If you provide affordable housing and economic opportunity, people will vote with their feet.

Shorter shifts. In an impressive feat of data wrangling, researchers have built a truly global database on working hours. It covers 160 countries and includes 97 per cent of the world’s population. The findings are utterly fascinating. Globally, the average weekly hours worked (for adults) is 24.5 hours. That masks a big gender divergence, with men clocking 31.7 hours while women put in 17.2 hours (this does not track unpaid domestic labour or childcare of course). One surprising find is that hours worked is only *mildly* bell-shaped with GDP per capita, and weakly correlated with development overall. Perhaps we live to work after all? The big shifts are tracked by age. Young workers (aged 15-19) and the elderly (60 plus) see their hours plummet as countries develop, as school attendance and pension coverage tick up. At the same time hours for working-age men fall and female hours rise, almost exactly compensating for each other and leading to remarkable stability.

Mic drop moment? Traditional media is taking a kicking.  A new Reuters Institute report (shorter write up here) found that in countries including the US, Mexico, Thailand, and Nigeria people get their news from creators, rather than mainstream media. That’s not (yet) true for Japan, Germany, the UK or Norway. They argue that the news creators win over big audiences in populous countries where traditional media is under pressure and social media use is high. These audiences tend to be comprised of people who legacy outlets struggle to reach – right-leaning, young, male and distrustful. Creators flourish on YouTube, TikTok, and Instagram – platforms where news outlets struggle (follow us on YouTube and Instagram for more factual fodder on your feeds). But 85 per cent of the top 15 creators in these countries were men, with political commentary prone to male-dominated presentation. For now, strong media brands and lower social media use in the UK mean that more people pay attention to traditional media brands than news creators on social media… just about. But I’d recommend checking out the first figure in the write up to see how close we are to crossing that line. If our traditional media fails to maintain trust and entertain audiences, creators may fill the vacuum – and they’re mostly angry blokes talking into very large microphones.

Talking tax. If you’re feeling adrift in all the tax chatter these days, then I would recommend Ben Chu’s new series The Tax Conundrum – and not just because I’m in it. The first episode asks why we can’t have a grown-up national conversation about tax. There’s also some great international comparisons in episode two – with much to learn from happy high-tax Swedes and flat-tax Estonians. Come for the level-headed fiscal insights, stay for the marshmallow-based tax avoidance tips. Something to chew on as you make your way through your Halloween sweetie haul.

Something for the weekend | Down to the wire

Next week, the Chancellor will make her final policy decisions for the Budget (good thing she hasn’t had any distractions…). The estimates of the size of the hole she’ll need to fill have ranged widely (join us on Tuesday for our best guess) – but it boils down to some combination of spending cuts, tax rises and…rabbits?

Any spending cuts will be challenging, with the 2025 Spending Review, settling most departmental budgets until the year before the fiscal rules bite. Reeves has indicated that welfare may be in her sights – but we’re expecting this fiscal event to be about long-term reform not big savings, given the u-turn that resulted from the last rushed attempt.

Tax rises appear baked-in at this stage, but will they be borne by “working people”? (and who are working people anyway?) We’ve already suggested a range of measures adding up to more than £30 billion in additional revenue, while also making the system fairer. As speculation reaches fever pitch, the big debate seems to be about whether there will be a rise in income tax, whether or not offset by a reduction to employee national insurance as we proposed.

Everyone agrees that property should be up for serious reform, but it may prove a tough one to take on alongside raising serious cash. Pension tax reform is another option which is both economically viable and politically toxic.

And then there’s the rabbits… I’m told Jeremy Hunt elicited gasps of surprise in the RF office when he knocked *2p* off National Insurance in his final budget – when a 1p cut had been expected. Of course that’s nothing on Gordon Brown’s very long-lived winter fuel payment shaped rabbit in 1999. Phillip Hammond was short on rabbits, but rich in, um, toilet humour? One thing is certain – as things stand, the Treasury certainly isn’t… flush ( ͡° ͜ʖ ͡°).

Chart of the week

The Government’s child poverty strategy is due around the same time as the Budget, and the big question is how far the Government will go on scrapping the two-child limit on benefit support. Chart of the Week, taken from our latest briefing, makes the case for a full repeal of the policy. With the current policy, child poverty rates will hit an historic high of 34 per cent (4.8 million children) by the end of the Parliament. The half measures reportedly being considered – a three-child limit, reduced support after two children, or lifting it for working families – do reduce child poverty from where it otherwise would have been. Crucially, however, they’re insufficient to prevent child poverty from rising over the Parliament. Each of these measures would still see child poverty rates higher in 2029-30 than in 2024-25. Fully scrapping the two-child limit *would* achieve that falling child poverty milestone (and see at least 130,000 fewer children in poverty than the compromise options) – but only just. If the Government really wants to reduce child poverty – say back to levels last seen in the late 2010s – additional policies, like scrapping the benefit cap and re-linking housing support to local rents, would also be needed.