The UK is facing a fiscal challenge not seen in six decades: simultaneous rises in defence and health spending, alongside doubling debt-interest costs, are putting unprecedented pressure on public finances. In response, senior economists from the University of Oxford’s Department of Economics and Labour MPs met this week to explore evidence-based strategies to support long-term growth and fiscal stability.
The session, hosted through Oxford Elevate, focused on the urgent need for a comprehensive, credible fiscal strategy. An example of a recommendation discussed was to replace stamp duty with a land value tax: this would reduce housing market distortions and support labour market flexibility.
Speakers stressed that tax reform must be part of a broader package of reforms rather than piecemeal changes to credibility for markets and avoid policy uncertainty of last decade. Expenditure should also be included in such a strategy. Increasing public investment, especially in growth-enhancing areas such as transport, is vital.
The discussion brought together MPs and senior parliamentary staff with three leading economists:
- Paul Johnson CBE: Provost of The Queen’s College and former Director of the Institute for Fiscal Studies.
- Michael McMahon: Professor of Economics at Oxford and specialist in macroeconomic policy and fiscal institutions.
- Tony Venables CBE: Senior Research Fellow at Oxford, President-Elect of the Royal Economic Society and a leading authority on productivity, spatial economics, and international trade.
Professor Michael McMahon said:
"With defence and health spending rising together, the old rules no longer apply. Parliamentarians need direct access to evidence to support them as they make decisions that shape long-term growth and public finances. Workshops like this provide a vital bridge between research and policy."
Sonia Kumar MP said:
“The session with Oxford economists was a powerful reminder of how essential it is for MPs to stay closely connected to academic expertise. At a time when the country faces complex economic challenges, we cannot afford to make decisions in a vacuum. Engaging directly with leading researchers helps ensure that the policies we shape in Parliament are grounded in evidence, informed by rigorous analysis, and focused on long‑term national prosperity. I’m grateful for the insight shared at this session, and I’m determined that this kind of academic‑parliamentary dialogue becomes the norm rather than the exception.”
