Government money: where it comes from and where it goes
How much the UK government spends, collects and borrows, what the money goes on, and how to read the big numbers.
Suits: Citizenship, economics, maths and statistics, PSHE. Levels: ages 11–14, 14–16 and 16+. Rebuilt every night from the latest figures.
2025-26, all public spending, in cash terms.
Taxes and other income.
Spending minus money collected.
94% of the economy (2025-26).
Words to know
- Tax
- Money people and companies must pay to the government.
- Deficit
- The gap in one year when the government spends more than it collects.
- National debt
- All past borrowing added up.
- Cash terms
- Figures not adjusted for rising prices.
- GDP
- The value of everything the economy produces in a year.
- Per person
- A total divided by the number of people.
Charts
% of the economy. Government spending as a share of the economy. 2006-07 to 2025-26.
Source: HM Treasury (PESA), HMRC and ONS public sector finances
% of the economy. Money collected as a share of the economy. 2006-07 to 2025-26.
Source: HM Treasury (PESA), HMRC and ONS public sector finances
% of the economy. Borrowing as a share of the economy. 2006-07 to 2025-26.
Source: HM Treasury (PESA), HMRC and ONS public sector finances
% of GDP. Debt as a share of the economy, by month. September 2016 to August 2026.
Source: ONS, public sector finances
£ billion. The ten headings the Treasury uses, biggest first.
Source: HM Treasury
Spending by group, £ billion
| Group | 2024-25 | 2025-26 | Change | Share of 2025-26 |
|---|---|---|---|---|
| Social protection | 386.3 | 407.3 | ↑ Up 5.4% | 29.9% |
| Health | 242.4 | 257.5 | ↑ Up 6.2% | 18.9% |
| General public services | 160.2 | 165.5 | ↑ Up 3.3% | 12.2% |
| Education | 123.0 | 125.7 | ↑ Up 2.2% | 9.2% |
| Economic affairs | 88.0 | 94.0 | ↑ Up 6.8% | 6.9% |
| Defence | 63.7 | 65.4 | ↑ Up 2.7% | 4.8% |
| Public order and safety | 51.8 | 55.7 | ↑ Up 7.5% | 4.1% |
| Housing and community amenities | 21.7 | 22.5 | ↑ Up 3.7% | 1.7% |
| Environment protection | 17.3 | 19.2 | ↑ Up 11.0% | 1.4% |
| Recreation, culture and religion | 13.6 | 15.1 | ↑ Up 11.0% | 1.1% |
Cash terms, not adjusted for prices. Groups follow the Treasury’s own headings; ‘general public services’ includes debt interest.
Questions
How much did the government spend in 2025-26? Write the figure in words.
Answer. £1,360.1bn, which is about £1.36 trillion.
Which group of spending was the biggest, and how much was spent on it?
Answer. Social protection: £407.3bn. The second biggest was health, at £257.5bn.
Did the government collect more or less money than it spent in 2025-26? By how much?
Answer. Less. It collected £1,208.8bn and spent £1,360.1bn, so it spent £151.3bn more than it collected.
About 69.5 million people live in the UK. Roughly how much was spent for every person?
Answer. £1,360.1bn divided by 69.5 million is about £19,574 each. Rounded, £19,600.
Borrowing is the gap in one year. What do you think the ‘national debt’ means?
Answer. The national debt is all the past borrowing added up, less what has been paid back. The UK’s was £2,924bn (94% of the economy) in 2025-26.
What percentage of all spending in 2025-26 went on health? Give your answer to the nearest whole number.
Answer. 257.5 ÷ 1360.1 × 100 = 18.9%, so about 19%.
Pensions and benefits (social protection) and health together: what fraction of all spending is that?
Answer. (407.3 + 257.5) ÷ 1360.1 = 49%, close to half.
Defence spending was £63.7bn in 2024-25 and £65.4bn in 2025-26. What is the percentage change?
Answer. (65.4 − 63.7) ÷ 63.7 × 100 = +2.7%.
Borrowing as a percentage of spending: what share of the year’s spending was paid for by borrowing?
Answer. 151.3 ÷ 1360.1 × 100 = 11.1%.
Look at the chart of spending as a share of the economy. In which of the last 20 years was it highest, and what was the figure?
Answer. 2020-21, at 52.3% of the economy. (Ask: what was happening then? Big rises often match recessions or emergencies.)
Spending figures in pounds are ‘cash terms’. Why can comparing cash figures from ten years ago mislead?
Answer. Prices have risen, so the same number of pounds buys less than it used to. Spending that looks much bigger may be similar once prices are allowed for. Showing spending as a share of the economy is one way round this.
Use the figures to explain the difference between the deficit and the debt.
Answer. The deficit is one year’s gap: £151.3bn in 2025-26. The debt is the total built up over many years: £2,924bn. A deficit adds to the debt; a surplus would reduce it.
Debt is 94% of GDP. Why do economists compare debt with GDP rather than quoting pounds?
Answer. The same pounds are a bigger burden for a small economy than a big one, and incomes grow over time, so a ratio shows whether debt is heavy relative to what the country earns. It still says nothing about interest rates or what the borrowing paid for.
Interest on the debt cost £130.3bn in 2025-26. What share of all spending is that, and how does it compare with other groups?
Answer. 130.3 ÷ 1360.1 = 9.6% of spending, or about £1,875 per person. It is more than the whole budget for defence, public order and safety, economic affairs.
A government can pay for spending by raising tax or by borrowing. Give one argument for each and one risk of each. What evidence would you need to decide?
Answer. Open question. Look for: tax takes money from people now but is cheaper long term; borrowing spreads the cost over time but adds interest and may be hard to repay if rates rise. Evidence: interest rates, growth, what the money buys, who pays.
Ideas for discussion
- Is it fair to call borrowing ‘good’ or ‘bad’? What would you need to know?
- Which would you protect if money were tight: pensions, health, education or defence? Why? What would you give up?
- Why might two people look at the same spending chart and disagree about whether the government spends too much?
Answer sheet: Government money
Find. £1,360.1bn, which is about £1.36 trillion.
Find. Social protection: £407.3bn. The second biggest was health, at £257.5bn.
Find. Less. It collected £1,208.8bn and spent £1,360.1bn, so it spent £151.3bn more than it collected.
Calculate. £1,360.1bn divided by 69.5 million is about £19,574 each. Rounded, £19,600.
Explain. The national debt is all the past borrowing added up, less what has been paid back. The UK’s was £2,924bn (94% of the economy) in 2025-26.
Calculate. 257.5 ÷ 1360.1 × 100 = 18.9%, so about 19%.
Calculate. (407.3 + 257.5) ÷ 1360.1 = 49%, close to half.
Calculate. (65.4 − 63.7) ÷ 63.7 × 100 = +2.7%.
Calculate. 151.3 ÷ 1360.1 × 100 = 11.1%.
Find. 2020-21, at 52.3% of the economy. (Ask: what was happening then? Big rises often match recessions or emergencies.)
Explain. Prices have risen, so the same number of pounds buys less than it used to. Spending that looks much bigger may be similar once prices are allowed for. Showing spending as a share of the economy is one way round this.
Explain. The deficit is one year’s gap: £151.3bn in 2025-26. The debt is the total built up over many years: £2,924bn. A deficit adds to the debt; a surplus would reduce it.
Judge. The same pounds are a bigger burden for a small economy than a big one, and incomes grow over time, so a ratio shows whether debt is heavy relative to what the country earns. It still says nothing about interest rates or what the borrowing paid for.
Calculate. 130.3 ÷ 1360.1 = 9.6% of spending, or about £1,875 per person. It is more than the whole budget for defence, public order and safety, economic affairs.
Discuss. Open question. Look for: tax takes money from people now but is cheaper long term; borrowing spreads the cost over time but adds interest and may be hard to repay if rates rise. Evidence: interest rates, growth, what the money buys, who pays.
Sources: HM Treasury (Public Expenditure Statistical Analyses, Public Sector Finances), ONS. See also: Where the money goes · Government spending · National debt · Spending per person.