Why Start Here?
Every political argument about public services (whether the NHS needs more money, whether schools are underfunded, whether welfare is too generous or not generous enough) is carried on in the abstract. Numbers are quoted selectively, and comparisons are made with countries chosen for effect. The full picture is almost never set out.
The Generational Reset starts differently. Before making any argument about a particular area of spending, this overview sets out the whole picture: what the UK government spends in total, where every major pound goes, what that costs as a share of the economy, and how those choices compare with similar democracies. Every pillar in Section One then makes its specific argument within this overall frame.
The starting point is arithmetic, not ideology.
1. The Fiscal Context: What the Numbers Are
In 2024-25 the UK government spent about £1,283 billion, 44.4% of GDP.1 It took in about £1,132 billion in receipts, and borrowed the gap of £151 billion. Public sector net debt stood at 93.8% of GDP at the end of March 2026, about £2,911 billion, up from a revised 93.2% a year earlier.2
Debt interest in 2024-25 cost £106 billion, 8.3% of all government spending. The OBR's October 2026 forecast puts it at £109 billion in 2025-26 and £124 billion this year, rising to £139 billion by 2028-29 and £160 billion by 2031-32.3 Every reform the Generational Reset argues for has to work within these numbers.
Three numbers define the limits every spending decision works within:
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Total spending: about £1,283bn in 2024-25, or 44.4% of GDP
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Annual deficit: about £151bn, the gap between spending and revenue, borrowed each year
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National debt: £2,911bn, 93.8% of GDP (end-March 2026), the accumulated total of all past deficits
2. Where the Money Goes: The Whole Picture
The table below shows every major area of UK government spending in 2024-25: its approximate cost, its share of total spending, its share of GDP, and the Generational Reset pillar that examines it in detail. Every later pillar argument should be read against this map.
View underlying data as a table
| Spending Area | UK £bn | % of Total | % of GDP | See pillar |
|---|---|---|---|---|
| Social protection — welfare & benefits (excl. pension) | £237bn | 18.5% | 8.3% | S1_03 Welfare |
| Health — NHS and public health | £242bn | 18.9% | 8.4% | S1_01 NHS |
| State pension (triple lock) | £146.5bn | 11.4% | 5.1% | S1_08 State Pension Explained / S1_03 Welfare |
| Debt interest | £106bn | 8.3% | 3.6% | S1_07 Public Debt |
| Education — schools, FE, HE, early years | £119bn | 9.3% | 4.1% | S1_02 Education |
| Economy, infrastructure & transport | £87bn | 6.8% | 3.0% | S3_03 Economy / S1_12 Transport |
| Defence | £62bn | 4.8% | 2.1% | S1_06 Defence |
| Public order & criminal justice | £48bn | 3.7% | 1.7% | S1_05 Criminal Justice |
| Housing & environment | £40bn | 3.1% | 1.4% | S1_04 Housing / S1_13 Environment |
| Energy & net zero | £35bn | 2.7% | 1.2% | S4_01 Energy |
| Other — foreign affairs, science, culture, admin | £47bn | 3.7% | 1.6% | S1_14 Overseas Aid / S1_15 Science and Research |
| Local & devolved services not captured above | £112bn | 8.7% | 3.9% | S1_10 Local Government / S1_11 Devolved Governments |
| TOTAL (sum of rows above) | £1,283bn | 100.0% | 44.4% |
Source: HM Treasury PESA 20251, OBR Economic and Fiscal Outlook March 20252 and October 20263, House of Commons Library4. Figures rounded.
3. The Two Lines That Shape Everything Else
Before any debate about the NHS, education, welfare or defence, two lines in the budget take more than £252 billion without providing a single public service. Understanding them is the foundation for a sensible conversation about everything else.
3.1 The State Pension: £146 Billion
The state pension is one of the largest single lines in the government budget. It is protected by the triple lock, which guarantees a rise each year of whichever is highest of inflation, earnings growth or 2.5%. The triple lock costs about £12 billion a year more than linking the pension to earnings alone. The pension is universal, paid to wealthy and poor retirees alike, and every major party committed to the triple lock for electoral reasons rather than on evidence about where support is most needed. That consensus broke in September 2026, when Prime Minister Andy Burnham proposed replacing it from 2030, and the October 2026 Budget confirmed the change: from April 2030 the pension is to rise by inflation or 2.5%, or by more when needed to keep pace with earnings (see Welfare).5
But before looking at what the state pension costs and how it is protected, there is a more basic point that almost never gets made in public debate, and without it the political argument about pensions rests on a misunderstanding.
This is the basic difference between the state pension and a private or workplace pension fund. A private fund takes your contributions, invests them in shares, bonds, property and infrastructure, and pays out the returns as your retirement income. The money exists; it has been invested and has grown. When you draw on it, you are drawing on accumulated capital, and the fund's obligations are matched by real assets.
The state pension has no such assets. It is pay-as-you-go: a direct transfer from current workers to current retirees. That is not in itself a criticism; pay-as-you-go is a legitimate model used across many similar democracies. But the political language around the state pension consistently presents it as something it is not. "I paid in all my life and I deserve my return", heard constantly in debates about the triple lock, describes a private pension, not the state pension. What today's pensioners paid in funded their parents' generation's retirement. What they receive is funded by their children's and grandchildren's earnings.
Norway shows most clearly what a funded alternative looks like. It took North Sea oil revenues broadly comparable to the UK's over the same period and invested them in the Government Pension Fund Global, worth about $2.2 trillion (£1.7 trillion) at the end of 2025, whose returns help fund Norwegian public spending. The UK took comparable revenues, spent them, and has no equivalent asset. That contrast is the central story of how the UK has treated different generations in its public finances over the past forty years, and it links directly to the Public Debt pillar's case for a Sovereign Wealth Mechanism.
The Welfare pillar examines the triple lock, its costs and its reform in full. The point for this overview is that £146.5 billion, 11.4% of all government spending, is allocated automatically by formula every year to one age group, on the basis of a political commitment that most of its supporters do not fully understand.
The state pension costs £146.5bn a year, 11.4% of all government spending, and is a pay-as-you-go transfer with no invested assets: National Insurance contributions are spent at once on current retirees, not saved. Norway took broadly comparable North Sea oil revenues and invested them in the Government Pension Fund Global, now worth about £1.7 trillion; the UK took comparable revenues and spent them, and has no equivalent asset.
Because the state pension works like any other transfer payment rather than a return on invested contributions, "I paid in all my life and I deserve my return" describes a private pension, not this one. This connecting argument is this project's own; no single source states it. The confusion matters: as long as the pension is widely seen as an earned return rather than a political choice renewed every year, the case for weighing its cost against other priorities struggles to get a hearing.
The causation above supports more than correcting the record. One option is to leave the ownership framing unchallenged, on the view that reopening it risks looking like an attack on pensioners. Another is to tackle the pension's cost only through the reform the Welfare pillar proposes (a smoothed earnings link), without first correcting how the pension is understood. The third, which this document takes, is to state the facts clearly and repeatedly as the starting point any reform debate needs, leaving the reform itself to the Welfare pillar.
Choosing to state clearly that the pension is a pay-as-you-go transfer, knowing some will read it as an attack on pensioners, rests on a value judgement this document makes openly: describing the system accurately should come before any argument about reform, even at a real political cost to whoever says it. A reader who thinks correcting this misunderstanding matters less than the political stability the current framing provides, or who believes "I paid in" carries moral weight whatever the funding mechanism, is not wrong on the evidence. They are weighing the same fact against a different view of what pensioners are owed.
State clearly and consistently that the pension is a pay-as-you-go transfer, not a funded return, as the starting point for any credible debate about triple lock reform; the reform itself is the Welfare pillar's proposal. The falsification test below sets out what would show this framing is failing to change the political conversation it is meant to open up, not whether triple lock reform succeeds fiscally.
3.2 Debt Interest: £106 Billion
The UK pays £106 billion a year in interest on its accumulated debt. That buys no public service; it is the cost of past decisions to spend rather than invest, cut rather than maintain, and borrow rather than build the productive capacity that would have made borrowing unnecessary. The NHS maintenance backlog, the failure to build homes, the collapse in further education funding: each deferred costs that now show up partly as interest on debt.
The Public Debt pillar examines this in full. The point here is that £106 billion, close to the whole education budget of £119 billion, leaves the public sector every year in interest payments, reducing what is available for every other priority.
4. How the UK Compares: The International Picture
The UK's spending choices are political, not economically inevitable, and comparing them with similar democracies shows where the UK has chosen differently and what those choices have produced.
The table below compares the UK with France, Germany, the Netherlands, Sweden and the EU average across the main spending categories, as a percentage of GDP. All figures use the same international classification of government spending by function (COFOG): the UK's come from the Treasury's PESA tables for 2024-25, the others from Eurostat for 2024. A higher or lower figure is not automatically better or worse, but the differences are worth understanding.
| Country | Health % GDP | Education % GDP | Social Prot. % GDP | Defence % GDP | Debt Int. % GDP |
|---|---|---|---|---|---|
| UK | 8.4% | 4.1% | 13.3% | 2.1% | 3.6% |
| France | 8.9% | 5.1% | 23.7% | 1.9% | 2.0% |
| Germany | 7.6% | 4.5% | 20.4% | 1.4% | 1.1% |
| Netherlands | 7.3% | 5.1% | 16.6% | 1.6% | 0.7% |
| Sweden | 7.4% | 7.3% | 19.1% | 2.0% | 0.8% |
| EU average | 7.3% | 4.7% | 19.6% | 1.5% | 1.9% |
Sources: HM Treasury PESA 2025 (UK)1; Eurostat, general government expenditure by function (COFOG), 2024 (other countries)6. Figures are the latest available and subject to revision. National definitions differ at the margins; defence on the NATO definition is higher for most countries.
5. What the Comparison Shows
Several patterns in the comparison are worth naming, because they are rarely discussed together.
5.1 Health: The UK Is Not a Low Spender
At 8.4% of GDP, UK public spending on health is above Germany, the Netherlands, Sweden and the EU average on this measure, and a little below France. Some of those countries channel more health spending through compulsory insurance funds; on the OECD's health accounts, which count that spending, the UK spends about 6% less per person than France and well below Germany, as the NHS pillar sets out. Either way, the UK is not an outlier on spending. The bigger problem is that its health outcomes lag those of countries spending similar amounts, which the NHS pillar examines in detail.
5.2 Education: A Real Gap
At 4.1% of GDP, UK public spending on education is below the EU average of 4.7%, below France and the Netherlands (5.1%), and well below Sweden (7.3%). It has fallen from a peak of about 5.5% of GDP around 2010. The gap is sharpest in early years and further education, exactly where international evidence shows the highest returns. The Education pillar examines this in detail.
5.3 Social Protection: Low in Level, Skewed in Make-up
At 13.3% of GDP, UK social protection spending is well below every comparator: France (23.7%), Germany (20.4%), Sweden (19.1%), the Netherlands (16.6%) and the EU average (19.6%). Part of the gap reflects the UK's lower state pension, with more retirement income coming from workplace and private pensions, as in the Netherlands. But the make-up matters as much as the level. Within a smaller budget, UK spending is tilted toward pensioners through the triple lock, while working-age support (Universal Credit, disability benefits, help with rent) is among the least generous in the OECD. The Welfare pillar examines the make-up in detail.
5.4 Defence: Rising from a Low Base
At 2.1% of GDP on this measure (higher on NATO's wider definition), UK defence spending is above every comparator here except Sweden. The UK has committed to reach 2.5% of GDP by 2027 and NATO's new 3.5% core target by 2035. What matters is not just the percentage but what it buys, and the Defence pillar examines the procurement failures that mean more money has not reliably produced better capability.
5.5 Debt Interest: The Compounding Cost of Past Decisions
At 3.6% of GDP, UK debt interest is far above France (2.0%), Germany (1.1%), the Netherlands (0.7%) and Sweden (0.8%), and nearly twice the EU average. That is no coincidence. It reflects a long history of deficits, a debt stock that has grown faster relative to GDP than in most comparable economies, and the UK's unusually large share of inflation-linked debt, whose cost rose sharply with inflation after 2021. The Public Debt pillar examines the trajectory and what can be done about it.
6. The Mix Question: What This Project Is About
The most important question in UK public spending is not whether to spend more or less in total. It is how the existing budget, and any extra revenue, is shared between competing priorities. Political debate almost never addresses this directly, because doing so means naming who gains and who loses from any reallocation.
The Generational Reset does not claim to have the definitive answer. It argues that the current mix is not the product of an open, evidence-based public debate but of electoral arithmetic, accumulated political decisions and inertia. The purpose of this project is to put the full picture in front of the public and invite a different kind of conversation.
Each pillar in Section One asks the same questions about its area of spending: what are we getting for what we spend, how does that compare with what similar countries achieve, what would have to change to get better results, and what would that cost and who would bear it? Read together, the answers make the case for why the mix needs to change, and what changing it would involve.
7. How to Read Section One
Each pillar in Section One follows the same structure:
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Executive Summary: the argument in full, in plain language
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The Numbers That Matter: the key data, sourced and checkable
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The Diagnosis: what is actually happening and why, without political spin
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The Steel Man: the strongest case against the reforms proposed, taken seriously
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Analysis: the evidence examined in depth
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Counter-Arguments: the objections addressed directly
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Cross-Pillar Dependencies: how this area of spending connects to others
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Proposals for Change: what the evidence suggests should be different, put forward for public debate and challenge
The Proposals for Change are not a manifesto or a programme for government. They are the case the evidence supports, put forward for public examination. The Generational Reset invites challenge, more evidence and better arguments, which is the purpose of the forum this project is building.
8. The Pillars of Section One
Section One's documents each examine a major area of UK public spending:
| Document | Spending | Core argument |
|---|---|---|
| S1_01 NHS | £242bn | Underfunded compared with peers and inefficient, with the failure of social care a major cause of delayed discharges |
| S1_02 Education | £119bn | Not underfunded overall but badly misallocated, with too little reaching the early years and the most disadvantaged |
| S1_03 Welfare | £383.9bn | Skewed by electoral arithmetic toward pensioners; working-age support among the least generous in the OECD |
| S1_04 Housing | £40bn | Broken by design: a planning system used to protect asset values rather than house people |
| S1_05 Criminal Justice | £48bn | A charge rate of about 7%, a Crown Court backlog in the tens of thousands of cases, and rehabilitation funded only from whatever custody leaves over |
| S1_06 Defence | £62bn | The strategy is broadly right. The procurement machine that delivers it is not |
| S1_07 Public Debt | £106bn interest | £2.9 trillion of accumulated past decisions, and a sovereign wealth mechanism to avoid repeating the mistake |
| S1_08 State Pension Explained | £146.5bn | Not a pension but a pay-as-you-go transfer, and what a funded alternative would look like |
| S1_09 Fiscal Hierarchy | Whole budget | The unspoken order in which spending is protected, and how a democratic alternative could be designed |
| S1_10 Local Government | £239bn | A council tax base frozen in 1991 against a legal duty to fund social care that keeps growing |
| S1_11 Devolved Governments | £83bn block grant | How the Barnett formula funds Scotland, Wales and Northern Ireland |
| S1_12 Transport | £48.9bn | Rail, roads, buses, the cost of building, and fuel duty |
| S1_13 Environment | £19.2bn | Water, flooding, waste and nature, and the neglect of maintenance and measurement |
| S1_14 Overseas Aid | £13.0bn | What counts as aid, refugee costs in the UK, and the cut to 0.3% |
| S1_15 Science and Research | £22.6bn by 2029-30 | Research funded below cost, the reliance on international fees, and R&D tax relief |
| S1_00 This document | Whole budget | The fiscal picture against which every other pillar argument should be read |
The Generational Reset does not pretend these spending questions have simple answers. It argues that they have answers grounded in evidence, comparative data and a clear account of what the current system produces and why. That is what each pillar in Section One tries to provide.
The Generational Reset is a non-partisan, public-interest project. It is not affiliated with any political party, does not accept corporate funding, and publishes all its work under open licence for public discussion and adaptation.
For public discussion. Not affiliated with any political party. | generationalreset.org
The Generational Reset | S1_00: Public Spending Overview | For public discussion. Not affiliated with any political party. | generationalreset.org