Restore aid to 0.7 percent: note

Central fiscal result

+£4.0bn - Net fiscal impact in 2028-29

Low case: +£3.0bn. High case: +£7.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models restore aid to 0.7 percent by 2028-29.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£4.0bn in 2028-29.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross programme or delivery cost: +£4.6bn
• Tax and receipt offsets: -£0.3bn
• Administration and evaluation: +£0.1bn
• Behavioural and pass-through effects: -£0.4bn

Central net impact: +£4.0bn in 2028-29.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: +£0.4bn. Phased implementation and take-up.
• 2027-28: +£2.2bn. Phased implementation and take-up.
• 2028-29: +£4.0bn. Phased implementation and take-up.
• 2029-30: +£4.0bn. Phased implementation and take-up.

Main source groups

• Banerjee and Duflo, "Do Firms Want to Borrow More?" (Review of Economic Studies, 2014): Some firms are credit constrained, so public finance can support investment when well targeted; relevant to development banks and business finance.
• Liberal Democrats, "Funding a Fair Deal: Liberal Democrat Manifesto Costings" (2024): Party costings give 2028-29 spending, revenue and investment figures; used as starting anchors, not official costings.
• Nordhaus, "Climate Change: The Ultimate Challenge for Economics" (American Economic Review, 2019): Climate change creates large external costs, but policy must balance abatement, innovation and costs; relevant to carbon and green-investment policy.
• HM Treasury, "Spending Review 2025" (2025): The review sets departmental spending plans across health, defence, housing, schools and transport; provides implementation and budget context.
• Liberal Democrats, "For a Fair Deal: Liberal Democrat Manifesto 2024" (2024): The manifesto gives announced policy detail across health, care, housing, taxes and climate; used to define the policy scenarios.