We Cannot Afford Cuts: An alternative to the 2025 Spending Review and welfare reforms using Common Sense Spending Multipliers

New Report from Northumbria’s Common Sense Policy Group Exposes Flawed UK Fiscal Strategy and Calls for Urgent Investment-Led Renewal
A groundbreaking new report from the Common Sense Policy Group at Northumbria University challenges the UK Government’s economic strategy, revealing the long-term economic damage caused by sustained spending cuts and regressive welfare reforms. The report introduces updated “Common Sense Spending Multipliers” that demonstrate the powerful economic returns of public investment and the compounding harms of austerity.
Drawing on data from 25 advanced economies between 1996 and 2019, the report shows that:
• Capital spending—on infrastructure, research, education, and healthcare—yields long-term economic benefits, with a peak multiplier of 2.99 in year 9. For every £1 invested, the economy gains nearly £3, and the Exchequer recoups £1.20 in tax revenue.
• Current spending—on public services, welfare, and salaries—provides a short-term boost, with a peak multiplier of 1.35 in year 2, returning 54p to the Exchequer for every £1 spent.
“The economic assumptions of the Office for Budgetary Responsibility are simply wrong” said Professor Howard Reed, Economics Lead for the Common Sense Policy Group and Director at Landman Economics. “Our multiplier effects developed from in-depth analysis of 25 high income countries over 30 years suggests that Government current and capital spending are the key means of rebuilding so many electoral critical communities”
The report also warns that over the past 15 years, billions in lost investment have triggered ripple effects that continue to undermine growth. It further cautions that the Government’s proposed welfare reforms will deepen inequality and regional disparities. Using the Landman Economics Tax-Transfer Model, the analysis finds:
• Households with two or more disabled members in the poorest decile will lose 7.2% of their income by 2029–30.
• Regions with high disability rates, such as Wales (–1.1%) and the North East (–1.0%), will be hardest hit, while London and the South East see minimal losses.
• These changes represent a redistribution away from the most vulnerable households and regions, including many Red Wall constituencies, to the South East.
Professor Matthew Johnson, Chair of the Common Sense Policy Group and Professor of Public Policy at Northumbria University added that “the budgetary decisions made over the past two decades are highly irresponsible. The Government’s decision to continue austerity undermines its own agendas: growth, national renewal and any prospect of re-election. This is a spending review and a broader approach that needs to be ditched immediately if Britain is ever to recover.”
The report concludes with a bold alternative: the “Act Now” programme, a fully funded plan for national renewal based on progressive tax reform and strategic investment.
Key Recommendations:
• Replace outdated fiscal rules with new economic rules focused on long-term growth.
• Reform institutions to support sustainable debt reduction and economic success.
• Restore public investment for the public good.
• Implement tax reform to close the fairness gap and shift the burden from productive work to passive wealth and environmental harm.
“Spending to renew Britain is the only way in which to achieve electoral success,” the report states, adding “the Government needs to grasp the nettle” and “support public investment.”
“With polling currently indicating a Reform UK majority at the next election, the message to the Government is simple: Don’t compound the existing problems” concluded Dr Elliott Johnson, Impact Lead for the Common Sense Policy Group and Vice Chancellor's Fellow in Public Policy, Northumbria University. “Be bold, spend more, and multiply the economic, social and electoral benefits. It’s just common sense”.