On the 8th of July, the Chancellor of the Exchequer gave an economic update statement in the House of Commons. He announced the Government’s new Plan for Jobs, and confirmed how much money the Government has provided so far to help deal with the Covid-19 pandemic.

Using the Chancellor’s statement, and estimates from the Office for Budget Responsibility (OBR), we can have a closer look at the funding that’s being provided. The visualisation below shows the various things that this money has been spent on. Taken together, it comes to a total of about £190 billion.

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Source: OBR, Fiscal sustainability report – July 2020, 14 July 2020

By any measure, this is a lot of money – and it’s understandable why the Government would spend so much, given the pandemic’s impact on the economy – but when we talk about millions and billions it can be hard to grasp just what that means. Here are a few ways of thinking about this total that may make it easier to understand.

Government spending: the trillion-pound Chancellor

Over the past decade, total public spending has generally been around £870-900 billion per year. In the Budget in March, the Government indicated that spending was likely to be higher than this, but not too much out of the ordinary – about £930 billion for the year.

However, as the chart below shows, the extra spending to tackle the Covid-19 pandemic has pushed the total nearly 15% higher. Although it has not increased by the full £190 billion (because, as the Institute for Fiscal Studies pointed out recently, some of the recent announcements will be funded by lower spending elsewhere in Government), this will in fact be the first time ever that the UK has spent more than a trillion pounds in a single year.

A chart showing that total public spending in the UK has increased due to the Chancellor’s Covid-19 measures

How much is it per person?

Another way to think about how large this sum of money really is would be to divide it up among all the people in the UK. There are about 67.5 million people in this country, and if you split up £190 billion between all of them they would each get about £2,800.

Alternatively, you could look at it in terms of people’s wages. In 2019, the typical (median) salary in the UK before taxes was about £24,900 a year. At that rate, £190 billion would stretch to paying 7.6 million people. If you’re having difficulty imagining what 7.6 million people would look like, it’s roughly the population of the fourteen cities shown below put together.

A map of Great Britain showing the locations of 14 cities. The population add up to around 7.6 million people.

What else could it get you?

£190 billion is also roughly equivalent to the following things:

  • The amount that the Government was initially expecting to take in this year in National Insurance contributions and council tax put together;
  • Double the total expected cost of the HS2 railway from London to Manchester and Leeds. This would also leave almost enough to account for the total expected cost of Crossrail;
  • The total net cost of the UK’s EU membership from when the UK joined in 1973 right up to 2018. This would also leave enough to pay for the financial settlement, the so-called “divorce bill”, that the UK is paying as part of leaving the EU;
  • Using the amounts given in this year’s Budget, £190 billion would be about enough to pay the planned day-to-day budget for 2020-21 of this entire list of Government departments, as well as the block grants to Scotland, Wales and Northern Ireland:
    • Department for Education
    • Ministry of Defence
    • Home Office
    • Department for International Development
    • Ministry of Justice
    • Defra
    • HMRC
    • Department for Business, Energy and Industry
    • Department for Digital, Cultural, Media and Sport
    • Foreign and Commonwealth Office
    • HM Treasury

Difficult decisions on the horizon

All of this extra spending has had a significant impact on the public finances (our briefing paper gives more details). This means that the Chancellor is going to have to take some difficult decisions about how to pay for it all in the next few months, as we head towards the Autumn Budget and the Comprehensive Spending Review.

About the author: Philip Brien is a researcher specialising in public spending at the House of Commons Library. 

Photo credit: ©UK Parliament/Jessica Taylor