At a recent Frontier breakfast event, senior advisor Paul Johnson unpacked the Autumn Budget 2025.

He set out the context: low growth and falling productivity, rising debt interest and a growing state. And went on to look at the range of tax increases announced on the day, how they do (or don’t) fit into any strategy, and what challenges might be coming down the road.

After his talk, Paul stayed on for an audience Q&A, answering questions on tax, technology and what a credible growth strategy might actually look like. Here are some highlights from the discussion.

Why has the OBR consistently overestimated productivity growth?

The OBR assumed productivity would bounce back after the financial crisis, but it continually undershot expectations. Since the pandemic productivity growth has if anything been even worse, but again the OBR expected it would return at least to something between pre and post financial crisis rates. But again, it has failed to improve. They’ve now revised down their expectations following constant disappointment. At some point it might increase again. But forecasting turning points is notoriously difficult, and the anticipated improvement in productivity has not come. As Paul put it, “At some point it will pick up again, but when? No one knows.”

What would a genuinely growth-focused budget look like?

A focus on growth requires a clear, long-term strategy. It means investing in productive infrastructure and R&D and supporting a well-functioning education system – particularly improving vocational education. It requires a serious programme of tax reform, and radical reform to the planning system. It would likely prioritise flexibility in housing and labour markets. It would not, for example, be increasing regulation and taxes in those markets, nor would it be significantly increasing the costs of hiring highly skilled immigrants. Progress depends on stability and a clear policy direction. There has been little enough of that. “You can’t unlock productivity with short-term tweaks,” he said.

Can technology improve public service productivity?

AI and digital tools can help, and have done in HMRC and the DWP, for example. There is significant scope to make much better use of technology in the NHS, even at the most basic levels. That said, most major services will inevitably remain labour-intensive and dependent on human interaction. There’s no silver bullet. For areas like health and social care or education, the gains from automation will be limited and take time to materialise.

Why do people feel they’re paying more tax but getting less?

Taxes are at record levels relative to national income. Yet public services seem to be struggling. How can that be? Part of the answer lies in the fact that we are spending twice as much on debt interest as a share of national income than we were five years ago – so much of that extra tax revenue isn’t going to support public services at all.  A slow growing economy also means that there is smaller tax base than we might have expected, and hence less revenue to meet growing expectations. Add in demographic pressures and surging demand in areas like health, disability support and social care, and the disconnect becomes clearer.

Why aren't the big structural issues being tackled?

Despite the scale of the challenges, some of the biggest questions around tax, pensions, the NHS and the long-term shape of the state remain unresolved. Look at the manifestos before last year’s election. None of them even acknowledged the difficult decisions and trade-offs we will have to make over the coming years. Little groundwork has been laid for major change, and politically difficult areas — such as the pension triple lock or closer EU alignment — continue to be avoided. “There wasn’t much sign in this budget of a plan to tackle them,” he concluded.

The discussion offered a timely reminder that while the numbers may change from one fiscal event to the next, the deeper structural questions remain unresolved — and increasingly hard to ignore.