Paul Johnson CBE

Leading economist and media commentator Paul Johnson CBE, who will be awarded Honorary Doctor of Laws at the University of Sussex Winter Graduation 2024, talks about his career, his worries for younger generations, and his affection for Brighton and Sussex.

Paul Johnson, Director of the Institute for Fiscal Studies (IFS), has dedicated his career to analysing the economics of public policy – and communicating his understanding to those inside and, crucially, outside of parliament and academia.

From his appearances on BBC programmes such as ‘Question Time’ and ‘Today’, to his regular column for The Times and his comments across other media platforms, Paul clarifies and often criticises government decisions on what happens with the public purse.

When we meet, in the London offices of the IFS – just around the corner from University College London, where he is a visiting professor – he is pragmatic about the future of the UK economy.

“It’s going to be tough,” he says.“Our incomes aren’t rising, public services don’t look great, taxes are rising. We have some quite difficult choices to make about whether we are going to accept more public spending cuts or even higher taxes, and if we are going to accept policies that will get growth but require unpopular trade-offs – such as building houses where local residents aren’t keen.”

However, he also reassuringly points out that “we are better off than we have ever been, we live longer, we are healthier, we are much better educated, and we have higher incomes than we have had in the past”.

Unbiased research

Paul has been the IFS’s director since 2011. This is his second stint at the organisation that now has more than 40 researchers. He first joined in 1988 as a research economist, quickly rising to become deputy director before leaving to take senior positions in various government departments. 

He was an advisor on pensions and welfare reform in the Cabinet Office before moving onto roles with the Financial Services Authority, the Department for Education, and the HM Treasury, where he was director of public services. Between 2004 and 2007 he was deputy head of the Government Economic Service.

Why did he return to the IFS? 

“I like the greater freedom of being outside government, of being able to speak your mind publicly. And, as an analyst and an economist, I prefer being in an organisation which is there to do analysis and economics rather than being an economist who is serving other people.”

Paul, who was made a Commander of the British Empire (CBE) in 2018 for services to the social sciences and economics, is proud that IFS has gained a reputation for unbiased and robust research that’s independently funded.

Influence

“We have literally no money in the bank and no core funding,” he says. “We could go bust next year. We only survive because we do really high-quality work and put in high-quality proposals. In the sector, 5-10% of proposals get funded. We get 40-50% funded.”

While it’s often difficult to assess the direct influence of think-tanks on government policy, Paul says he’s aware that ministers listen to the IFS and that they can “build up a head of steam by putting information into the public domain”.

A recent success, he says, is IFS research that led to an increase introduced in the Chancellor’s Autumn Statement to the local housing allowance (the maximum amount that anyone in private rented accommodation can claim in benefit).

“We showed, using Zoopla data, that only 5% of properties were actually cheap enough to be covered by this allowance – down from about 25% in 2019,” he says. “That’s a good example of a relatively straightforward piece of work based on an understanding of the architecture of the welfare system.”

He would like to see all sorts of other changes – for example, cutting stamp duty tax on the purchase of primary residences and reforming council tax, as a way of freeing up the housing market and at least helping to make housing more affordable for young people.  

Shoreham-by-Sea

“If you can’t get help from your parents, it is very hard to get on the housing ladder, and that all feels very unfair. It means that how well you do is less down to your own effort. What I’ve started to say to young people is, choose your parents wisely!”

Paul, 57, who grew up in Shoreham-by-Sea in West Sussex and went to King’s Manor School (now Shoreham Academy), says: "As a local boy, it is a huge honour to be getting this degree from the University of Sussex.

"While I’ve lived in London for my whole adult life, I have always had a huge affection for Brighton and for Sussex, I come back regularly, and I have always recognised the great job the university does for its students and in the local community”.

His interest in politics, or more precisely, public policy, began in his teenage years, 

“I remember the 1980s with mass unemployment, and then people who hit their 20s in the 1990s and early 2000s were very optimistic and everything was growing. Then we had the financial crash of 2008 and no growth. Now, for the first time in 200 years, the younger generation is no better off than their parents.”

From school, he went to the University of Oxford to study Politics, Philosophy and Economics. He was in the same cohort as former Prime Minister David Cameron and current Chancellor Jeremy Hunt, although their paths didn’t cross at the time, which he puts down to them "coming from different backgrounds”. 

Last year saw the publication of his book Follow the Money, How much does Britain Cost? -  a highly readable analysis of how the British government raises and spends around £1 trillion of public money every year. Sussex hosted the book's launch event at the Ropetackle Arts Centre in Shoreham-by-Sea, which involved Paul being in conversation with the University's Vice-Chancellor Sasha Roseneil.

“I wrote it because I realised that in doing this job a long time, I knew a lot of important stuff,’ he says. “Also, it’s the sort of book I wish I had been able to read when I was 18.”

The book shows how much better we could do in raising taxes and spending the money wisely. But it doesn’t offer any easy solutions.

“There’s no simple answer that will make everyone better off,” he says. “We haven’t had sensible tax reform because there are always people who lose and are very noisy about it. There are a lot of simplistic ideas around how just taxing the rich a bit more would solve everything, but that’s not the answer. There will always be trade-offs. You can’t have your cake and eat it.”