Budget 2025: Strong Foundations and Future Security

 The sources frame Core Priorities & Immediate Action within the overarching theme of Budget 2025: Strong Foundations, Secure Future. The budget aims to deliver on the government’s promise of change by strengthening Britain’s economic foundations and setting a course for a secure future. The strategy underpinning the government’s plans is built on three principles: restoring economic and fiscal stability, increasing investment, and reforming the supply side of the economy.

The government has identified several core priorities that drive its policy decisions:

Core Priorities of Budget 2025

1. Cutting the Cost of Living and Tackling Inflation A primary commitment is to ease the cost of living for families across the UK, who are currently feeling the squeeze of high inflation.

• Goal and Impact: The Budget delivers a package of measures intended to remove around £150 of costs on average from household energy bills from April next year. Collectively, the policy decisions in the Budget are forecast by the Office for Budget Responsibility (OBR) to reduce Consumer Prices Index (CPI) inflation by 0.4 percentage points next year, which is described as the biggest near-term reduction in inflation due to government policy ever forecast by the OBR at a single fiscal event outside of a crisis.
• Specific Measures: The government is focusing on bearing down on everyday expenses like energy bills and transport costs. This includes implementing a one-year freeze on regulated train fares and prescription charges.

2. Relentlessly Pursuing Economic Growth and Investment The government states that economic growth is its central mission. This involves tackling historically weak productivity growth, which the OBR downgraded in its forecast.

• Strategy: The government is doubling down on its plans to relentlessly pursue growth through an ambitious growth strategy and supply-side reforms.
• Investment Commitment: The government is protecting increased public investment over the Parliament and is maintaining Public Sector Net Investment (PSNI) at the highest sustained level in four decades, averaging 2.7% of GDP over the forecast period.
• Support for Business: The priority includes backing business and unlocking innovation, making it easier for entrepreneurs to start, scale, and stay in the UK.

3. Securing the Public Finances and Cutting Debt A core choice is to cut debt and borrowing to reduce the amount spent on debt interest and support the Bank of England in reducing interest rates.

• Fiscal Rules: The government is committed to its non-negotiable fiscal rules. The OBR confirms the government is meeting the stability rule by £21.7 billion and the investment rule by £24.4 billion in 2029-30. The stability rule is forecast to be met a year early (in 2028-29).
• Fiscal Buffers: The government is doubling the buffer against the stability rule to £21.7 billion to provide stability for working people and businesses.

4. Fixing Welfare and Protecting Public Services The government prioritizes protecting and strengthening the NHS and other public services. It is also addressing the welfare system, which it states is failing too many sick people and children.

• Poverty Reduction: The government is scrapping the two child limit in Universal Credit (UC) to lift 450,000 children out of poverty, noting this is the quickest and most cost-effective way to reduce child poverty this Parliament.
• Efficiency and Savings: To ensure public money is well spent, the government is introducing an additional efficiency and savings target for all departments to meet at the next spending review, expecting £2.9 billion of savings in 2028-29, rising to £4.9 billion by 2030-31.

5. Making the Tax System Fairer and Modernizing Taxation The goal is to make the tax system fairer and fit for the 21st century by pursuing fair reforms that are long overdue.

• Wealth and Assets: The government is sustainably raising further revenue from sources of wealth by increasing taxes on property, dividend, and savings income. This includes introducing a High Value Council Tax Surcharge on residential properties in England worth over £2 million, starting from April 2028.
• Modernization: This involves ensuring motoring taxes cover electric cars via a modest self-reported per-mile levy (eVED), raising taxes on online gambling, and removing the UK’s customs duty relief for low-value imports.

Immediate Action and Key Policy Decisions

Specific immediate actions and policy decisions announced in the Budget include:

Priority Area	Immediate Action/Policy Decision (Implementation Date)	Supporting Sources
Cost of Living	Fuel Duty: Extending the 5p fuel duty cut until the end of August 2026, and canceling the planned inflation increase for 2026-27.
Cost of Living	Energy Bills: Ending the Energy Company Obligation and funding 75% of the domestic cost of the legacy Renewables Obligation for three years (2026-27 to 2028-29), removing around £150 in costs from energy bills.
Cost of Living	Rail Fares: Freezing all regulated rail fares in England for one year, starting from March 2026.
Cost of Living	Prescriptions: Implementing a one-year freeze on prescription charges, keeping the single charge at £9.90, from April 2026.
Welfare/Poverty	Child Poverty: Removing the two child limit in the Universal Credit Child Element from April 2026.
Welfare/Poverty	National Living Wage: Increasing the National Living Wage to £12.71 per hour for eligible workers aged 21 and over from April 2026.
Welfare/Fraud	Carer’s Allowance: Reassessing overpayments from 2015 to 2025 caused by incorrect operational guidance, and reducing/canceling existing debts for affected carers, starting in 2026.
Tax/Fairness	EOT CGT Relief: Reducing the Capital Gains Tax relief available on qualifying disposals to Employee Ownership Trusts (EOTs) from 100% to 50%, effective from November 26, 2025.
Tax/Fairness	Listing Relief: Introducing UK Listing Relief, a three-year exemption from Stamp Duty Reserve Tax for companies listing in the UK, effective from November 27, 2025.
Tax/Modernization	Capital Allowances: Introducing a new 40% First Year Allowance for main rate assets from January 1, 2026, while reducing the main rate writing-down allowance to 14% from April 2026.
Investment	Lower Thames Crossing: Committing a further £891 million to complete the publicly funded works, enabling the private sector to take forward construction and long-term operation.
Public Services	NHS Investment: Announcing £300 million of additional capital investment in NHS technology to boost productivity and improve patient outcomes.
Public Services	New Health Centres: Announcing plans for delivery of 250 new Neighbourhood Health Centres across England, with 120 operational by 2030.
Tax/Motoring	eVED Consultation: Publishing a consultation on the Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, set to come into effect from April 2028.

The convergence of these priorities—fiscal prudence, strategic investment in infrastructure and innovation, and targeted measures to relieve household pressure—is intended to lay the "strong foundations" necessary to ensure a "secure future" for the UK economy.

The sources define Tax Reform & Revenue Raising as a core pillar of Budget 2025, essential for achieving the overarching goal of building Strong Foundations, Secure Future. Faced with a revised downgrade in productivity forecasts that reduces expected revenue by around £16 billion in 2029-30, the government’s strategy emphasizes strengthening the public finances.

The goal of this comprehensive tax agenda is to make the tax system fairer and fit for 21st-century Britain. The government asserts that while everyone is being asked to contribute, the overall contribution is kept as low as possible through "fair reforms that are long overdue".

Here is a discussion of the key areas of tax reform and revenue generation detailed in the sources:

1. Rebalancing Taxation Towards Assets and Wealth

A major theme of the reform is addressing the historical context where "Britain has not historically done enough to make sure assets – and income from assets – contribute fairly". This approach aims to narrow the gap between tax paid on employment (which includes National Insurance Contributions, or NICs) and tax paid on asset income.

Changes focusing on asset income are forecast to raise £2.2 billion in 2029-30, with roughly two-thirds of the revenue expected to come from the top 20% of households:

• Property Income: From April 2027, separate tax rates will be introduced for property income in England, Wales, and Northern Ireland. The rates will be:
  • Property basic rate: 22%.
  • Property higher rate: 42%.
  • Property additional rate: 47%.
  • The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers.
• Dividend Income: The ordinary and upper rates of tax on dividend income will be increased by 2 percentage points (ppts) from April 2026.
• Savings Income: Tax rates on savings income (basic, higher, and additional rates) will be increased by 2 ppts across all bands from April 2027. Existing tax-free allowances, as well as Individual Savings Accounts (ISAs), will continue to protect low-to-middle income earners, as over 90% of taxpayers do not pay savings tax.

The government is also raising revenue from property wealth:

• High Value Council Tax Surcharge (HVCTS): This new charge is being introduced in England from April 2028 on residential properties worth £2 million or more. This is designed to tackle the current imbalance where an average Band D family home often pays more in Council Tax than a £10 million property in Westminster. Charges start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million, and will be levied on owners.
• Air Passenger Duty (APD): The higher rate of APD is being extended to cover all private jets over 5.7 tonnes from April 2027, ensuring wealthy individuals flying privately make a fair contribution.
• Inheritance Tax Thresholds: The nil-rate bands are being maintained (frozen) for a further year until April 2031, providing consistency in fiscal planning.

2. Modernizing Tax and Reforming Costly Reliefs

The government is modernizing the tax system to fit the needs of the 21st century:

• Electric Vehicle Excise Duty (eVED): A new per-mile levy is being introduced for electric and plug-in hybrid cars starting April 2028. This addresses the long-term decline in fuel duty receipts as more people switch to EVs. The tax for EV drivers will be around half the fuel duty rate paid by the average petrol/diesel driver.
• Online Gambling Duties: Duties on remote gambling are being raised to protect face-to-face gambling sectors (like bingo halls and horse racing). Remote Gaming Duty will increase from 21% to 40% from April 2026, and a new Remote Betting Rate of 25% will be introduced from April 2027. Bingo Duty will be abolished from April 2026.
• Low-Value Imports: Customs duty relief for low-value imports (goods valued at £135 or less) will be removed by March 2029 to address the unfair advantage online retailers have over domestic high street businesses due to rapid growth in cross-border e-commerce.
• Capital Allowances: The main rate writing-down allowance is reduced to 14% from April 2026, but a new 40% First Year Allowance (FYA) for main rate assets is introduced from January 1, 2026, preserving incentives for future investment.
• Employee Ownership Trust (EOT) CGT Relief: The relief available on qualifying disposals to EOTs is reduced from 100% to 50%. This reform addresses the escalating cost of the relief, which was forecast to rise to £2 billion by 2028-29, 20 times its original costing.
• Salary Sacrifice NICs Cap: NICs relief on salary sacrifice into pension schemes will be capped at the first £2,000 of pension contributions per person from April 2029. This controls costs, which were set to reach £8 billion by 2030-31, and targets arrangements that disproportionately benefitted higher earners.

3. Securing the Public Finances (Maintenance of Thresholds)

A primary method of raising significant, broad-based revenue without increasing headline tax rates is through maintaining existing thresholds:

• Freezing Tax and NICs Thresholds: The government is maintaining the Personal Allowance and equivalent NICs thresholds at their current levels for a further three years until April 2031. This choice ensures day-to-day spending is met with revenues. In 2029-30, three-quarters of the revenue raised from maintaining these thresholds is expected to come from the top half of households.
• Student Loan Threshold: The Plan 2 repayment threshold will be maintained at its 2026-27 level for three years from April 2027, ensuring graduates repay more of their loans, which the government deems fair given the economic benefits of a university education.

4. Closing the Tax Gap and Enhancing Compliance

The government is introducing ambitious measures to tackle tax avoidance, evasion, and error, aiming to bring the total additional revenue raised by closing the tax gap to £10 billion in 2029-30.

Key actions include:

• Informant Rewards: Introducing a strengthened reward scheme for informants providing valuable information, paying up to 30% of recovered tax in cases where tax collected exceeds £1.5 million.
• Tackling Promoters and Rogue Directors: New powers are being introduced to crack down on promoters of tax avoidance, and £25 million is being invested over five years to recruit additional Insolvency Service staff to disqualify more rogue directors who abuse the insolvency process to evade tax.
• Digitalization and Automation: Investing in HMRC technology to modernize the tax system, including building new technology to increase the use of data-driven prompts to prevent taxpayer errors. Additionally, businesses will be required to issue all VAT invoices as e-invoices from April 2029.
• Debt Management: Investing £153 million over five years to increase HMRC’s capacity to collect tax debt, including funding for additional staff and partnerships with private sector debt collection agencies.

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Analogy: The government’s Tax Reform and Revenue Raising strategy functions much like renovating an old house to secure its future viability. Instead of demanding massive new loan (raising headline rates substantially), the priority is fixing the leaky roof (closing the tax gap), modernizing outdated systems (eVED, digital invoicing), asking high-net-worth residents to pay their fair share of maintenance (property and asset taxes), and ensuring everyone contributes based on their income potential (freezing thresholds). These incremental but structural changes aim to put the national household budget on a "sustainable footing" capable of supporting essential future investments like the NHS and infrastructure.

The sources detail significant reforms to the Welfare System and Labour Market as critical components of Budget 2025: Strong Foundations, Secure Future. These measures are framed around fixing the system's failings, tackling poverty, and unleashing talent and opportunity to boost economic growth and productivity.

1. Reforming the Welfare System to Tackle Failings and Poverty

The government acknowledges that the welfare system is "not working as it should," particularly because it forces "too many sick people out of work and on to benefits". Total spending on welfare grew by nearly a percentage point as a share of GDP over the last Parliament. The Budget introduces specific reforms to tackle these issues:

Addressing Child Poverty (Universal Credit Reforms):

• Scrapping the Two Child Limit: The government is scrapping the two child limit in Universal Credit (UC) Child Element from April 2026. This measure is expected to lift 450,000 children out of poverty, rising to around 550,000 when combined with other measures like the expansion of free school meals.
• Impact on Poverty: The government states this is the quickest and most cost-effective way to reduce child poverty over this Parliament. It notes that growing up in poverty makes an individual more likely to end up out of education, employment, or training (NEET), and children in poorer households earn around 25% less at age 30 than their peers.
• Funding: This measure is funded by other policies in the Budget, including reforming Motability tax reliefs and clamping down on fraud and error in the tax and benefits systems.
• UK-wide Benefit: This change will support low-income families across the UK, benefiting 95,000 children in Scotland and 69,000 in Wales. The government will fund the Northern Ireland Executive to implement the change if they choose to, as welfare is devolved.
• Childcare Costs: The maximum amount of childcare costs that can be reimbursed for eligible UC claimants will be increased for each additional child above the current maximum cap for two children.

Reforms for Sickness and Disability Benefits:

• Incentivizing Work: The government is rebalancing UC rates so that it "doesn’t pay to be off sick rather than work". This includes reducing the Health Element for new claimants, a reform previously taken that saved £2.8 billion in 2030-31.
• Health and Disability Assessments: Measures are being taken to improve the accuracy and operation of health and disability benefits. The government is increasing the number of people who undergo face-to-face assessments and increasing Work Capability Assessment (WCA) reassessment capacity. An additional 122,000 WCAs will be conducted for existing claimants by 2029-30 to ensure people receive the right support level.
• Motability Scheme Reform: The government is limiting the generous tax breaks available to the Motability Scheme, saving over £1 billion over five years. This reform involves removing VAT relief for top-up payments used to lease expensive vehicles (from July 2026) and applying Insurance Premium Tax at the standard rate to insurance contracts on the scheme. This money helps fund the removal of the two-child limit. Motability Operations will also discontinue luxury vehicles, remove overseas breakdown cover, and reduce their lease mileage limits to align with commercial leases.
• PIP Review: The government has launched the Timms review of Personal Independence Payment (PIP), co-produced with disability groups, to ensure the system is fit for the future.

Tackling Fraud and Error:

• Universal Credit Claims: Nearly 13% of UC payments were lost to fraud and error in the previous Parliament. The government is extending DWP’s Targeted Case Review of UC claims to 2031, which identifies incorrect claims, saving an additional £1.3 billion in 2030-31.
• Pension Credit Claims: Reviews of Pension Credit claims at risk of being incorrect will be introduced from 2026 to 2029.
• Carer's Allowance: The government is addressing overpayments caused by incorrect DWP operational guidance between 2015 and 2025, committing to reassess and reduce or cancel existing debts for affected carers from 2026.

Supporting Low-Income Earners and Families:

• Help to Save: The Help to Save scheme will be made permanent, and eligibility will be expanded from April 2028 to include all UC claimants who receive the caring element or the child element.
• National Living Wage (NLW) and State Pension: The NLW for eligible workers aged 21 and over will increase by 4.1% to £12.71 per hour from April 2026. The basic and new State Pension will be increased by 4.8% from April 2026, in line with average weekly earnings, supporting over 12 million pensioners. The government remains committed to the Triple Lock for the duration of this Parliament.
• Housing Benefit: Earned income disregards in Housing Benefit will be introduced for claimants in supported housing and temporary accommodation to reduce the "financial cliff edge" when moving into work.

2. Labour Market and Opportunity (Unleashing Talent)

The government is committed to a dynamic labour market, ensuring businesses have access to skills and talent while maximizing opportunities for employment.

Tackling Youth Inactivity and Unemployment:

• Youth Guarantee: The government is making available more than £1.5 billion over the Spending Review period for investment in employment and skills support. This includes £820 million for the Youth Guarantee.
• Jobs Guarantee Scheme: As part of the Youth Guarantee, the government will guarantee a six-month paid work placement for every eligible 18- to 21-year-old who has been on UC and looking for work for 18 months. This covers 100% of employment costs for 25 hours a week at the relevant minimum wage.
• Independent Investigation: Alan Milburn, the former Health Secretary, will lead an independent investigation to tackle rising youth inactivity, focusing on preventing young people from becoming trapped out of work, education, or training.

Skills and Training Investment:

• Growth and Skills Levy (GSL): The investment package includes £725 million for the Growth and Skills Levy (GSL), which will support apprenticeships for young people, including fully funding SME apprenticeships for eligible individuals under 25.
• Apprenticeship System: New reforms aim to simplify the apprenticeship system and introduce short courses from April 2026.

Migration and Talent:

• Pro-Talent Reforms: The government is reforming the high-skill visa system to make it easier for "the world’s brightest and best to start, scale, and stay in the UK". Changes taking effect from November 2025 include:
  • Expanding the High Potential Individual route to graduates from the world’s top 100 universities.
  • Allowing international students to transition seamlessly from study to entrepreneurship through the Innovator Founder route.
  • Making the Global Talent visa simpler for top science and design talent.
• Global Talent Taskforce: A new Global Talent Taskforce will be established to attract leading professionals in priority sectors and provide tailored relocation support.
• Immigration System Fairness and Contribution: The government is reforming the asylum and migration system, requiring refugees to wait 20 years for settlement (up from five). A consultation on a new model of Earned Settlement for legal migrants proposes increasing the baseline qualifying period from five to 10 years for most migrants, and 20 years for refugees, emphasizing contribution to the economy and society.

Enforcement and Protection of Workers:

• Fair Work Agency (FWA): A dedicated ‘hidden economy’ team will be established within the new Fair Work Agency (launching April 2026) to take action in sectors known to have egregious breaches of employment rights legislation alongside illegal working and tax issues, starting with hand car washes.
• Employer Accountability: The FWA will explore using powers to disqualify directors whose abuse of workers’ rights makes them unfit to manage a company. The government will also aim to eliminate the backlog of cases inherited and will name employers who break the law more regularly within a year of their case closing.

Overall, the welfare and labour market reforms prioritize measures that incentivize work, protect vulnerable groups (especially children and those losing tax relief benefits), streamline services, and invest strategically in skills and talent pipelines to support the core mission of strengthening economic foundations for a secure future.

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The government’s effort to reform the welfare system, especially concerning child poverty and labor market inclusion, can be viewed as an attempt to re-engineer a complex machine. By funding the removal of the two-child limit (a specific flaw leading to poverty) through targeted efficiency savings and adjustments to tax reliefs (removing redundant or inefficient parts), the goal is to make the system operate more justly and efficiently, simultaneously cutting immediate social costs and boosting long-term economic potential by reducing barriers to work and supporting future generations.

The sources underscore that Public Sector Efficiency & Reform is a fundamental pillar of Budget 2025: Strong Foundations, Secure Future, intended to ensure that taxpayer money is spent wisely, public services are protected and strengthened, and the state becomes more productive.

This focus on efficiency and reform is critical because, despite increased public investment, the government must secure the public finances, especially given the downward revision of the productivity forecast by the OBR, which reduces expected revenue.

Here is a detailed discussion of what the sources say regarding public sector efficiency, saving, and reform:

1. New Efficiency and Savings Targets

A central element of the reform strategy is implementing mandatory savings targets across government departments:

• Mandatory Target: The government is introducing an additional efficiency and savings target for all departments to meet at the next spending review (SR25).
• Scale of Savings: This measure is expected to result in £2.9 billion of savings in 2028-29, rising to £4.9 billion by 2030-31.
• Reinvestment: Crucially, the NHS and Ministry of Defence will be allowed to retain and reinvest these savings to improve patient care and protect national security, respectively.

2. Driving Productivity and Modernization

The government views increased public sector productivity as essential for economic health. Several measures focus on improving departmental operations and technology:

• NHS Productivity: The government is aiming to increase NHS productivity by 2% per year, which is projected to unlock £17 billion of savings in England over three years for reinvestment into the health service.
• Digital Investment: £300 million of additional capital investment is allocated for NHS technology to boost productivity, support staff, and improve patient outcomes. This investment aims to drive the shift from analogue to digital, ensuring seamless navigation and communication between primary and secondary care.
• Leaner Civil Service: The government is aiming for a 16% reduction in back-office administration costs by 2029-30 to save money and refocus resources on frontline services.
• Digitalization of Tax: Investment in HMRC technology aims to modernize the tax system, including building new technology to increase the use of data-driven prompts to prevent taxpayer errors. Additionally, businesses will be required to issue all VAT invoices as e-invoices from April 2029.

3. Structural and Accountability Reforms

The government is reforming the machinery of government to enhance accountability and long-term planning:

• Office for Value for Money (OVfM) Legacy: The OVfM, a small, time-limited organization established at Autumn Budget 2024, played a crucial role.
  • The OVfM worked with departments to agree upon credible delivery plans for almost £14 billion of technical efficiencies per annum by 2028-29.
  • It recommended reforms to the spending framework, including a requirement for all departments to deliver at least 1% technical efficiencies a year in future years.
  • Its functions have now been embedded within HM Treasury.
• Reforming Controls and Accountability: Following the OVfM review, the government is reforming the public spending control and accountability framework to make government business more efficient, effective, and capable of quicker decisions. These reforms will be implemented from the start of the next financial year.
• New Frameworks: A New Planning and Performance Framework will require departments to publish medium-term outcomes linked to their SR25 funding and annual strategic plans in Spring 2026.
• Non-Executive Director Appointments: Each department will appoint a Non-Executive Director to identify opportunities for additional efficiencies and savings by challenging existing practices.

4. Asset and Liability Management

The reform drive includes proactively managing public sector assets and liabilities to deliver better value:

• Strategic Asset Review (SAR): The government is announcing a Strategic Asset Review to report ahead of the next spending review in 2027.
• Asset Efficiency Target: A new £1 billion asset efficiency target is set, to be met by 2030 through asset disposals and generating new income from public sector assets. This is in addition to the existing £1 billion estate disposal target.
• Balance Sheet Framework: This new framework sets out a comprehensive approach for managing public sector assets, liabilities, and entities, guiding decisions on transactions, private finance use, and asset disposal.
• Implicit Liabilities: New guidance is being published on managing the government’s implicit liabilities (private sector liabilities the government may be compelled to meet during crises), supported by a £15 million fund for developing and implementing mitigation strategies.
• Pension Liability Reform: Liabilities held by the Atomic Weapons Establishment pension scheme and the Nuclear Liabilities Fund will no longer be pre-funded, confirming £2 billion further asset disposals.
• Maintenance Review: A value-for-money review of the maintenance of public sector assets will be conducted ahead of the next spending review.

5. Targeting Waste and Fraud

Significant immediate action is dedicated to cutting wasteful spending and increasing fraud enforcement:

• Reducing Cost of Politics: Measures include abolishing Police and Crime Commissioners and reducing councillor numbers by around 5,000, saving over £250 million over five years.
• Asylum System Waste: The government is tightening the asylum system, having already reclaimed £74 million from asylum accommodation suppliers. Reforms also include changing the core protection offer for refugees to make it less attractive and accelerate returns.
• Covid Fraud Recovery: The government expects to deliver nearly £400 million of Covid fraud and error benefits to date and will relentlessly pursue more cases through the new Public Authorities Fraud Investigation and Enforcement Service.
• Welfare Fraud and Error: DWP is extending the Targeted Case Review of Universal Credit claims to 2031, which is expected to save an additional £1.3 billion in 2030-31. Reviews of Pension Credit claims at risk of being incorrect will also be introduced.
• DWP Operational Improvements: DWP will conduct an additional 122,000 Work Capability Assessments for existing claimants by 2029-30 to ensure people receive the right support level.

Summary of Outcomes

In the context of Budget 2025, these reforms and efficiency drives are crucial not just for meeting fiscal rules—allowing the current budget to move into a surplus by 2028-29, a year early—but also for funding strategic priorities, notably by enabling day-to-day spending to be £50 billion higher in 2028-29 compared with previous plans. This allows the government to deliver on its mandate to stabilize and improve public services.

The overall reform strategy ensures that public services are protected and investment is maintained at the highest sustained level in four decades (averaging 2.7% of GDP).