NRSA RED BOOK — BUDGET 2026
The First Palmer Budget: Fiscal Framework
No Profit Before Service. Every number on the dashboard. Every assumption challengeable.
BASELINE: OBR 2025-26 FORECAST
Current Revenue — £1,304bn
| Source | Amount | Notes |
|---|---|---|
| Income Tax | £330bn | Frozen thresholds dragging more into higher bands |
| National Insurance | £199bn | Employer rate at 15% from 2025 |
| VAT | £181bn | At 20% standard rate |
| Corporation Tax | £89bn | Rate at 25% |
| Council Tax | £49bn | Local — not central government revenue |
| Business Rates | £33bn | |
| Fuel Duty | £25bn | |
| Capital Gains Tax | £17bn | |
| Stamp Duty | £16bn | Property + shares |
| Alcohol & Tobacco | £22bn | |
| Insurance Premium Tax | £9bn | |
| Air Passenger Duty | £4bn | |
| Other receipts | £61bn | Student loans, reserves, public corps |
Note: Council Tax (£49bn) is collected locally for local services. Central government working revenue is approximately £1,255bn.
Current Spending — £1,416bn
| Department | Amount | Notes |
|---|---|---|
| Social Protection | £379bn | Pensions, UC, Housing Benefit, disability, carers, child benefit |
| Health (NHS) | £277bn | |
| Education | £146bn | |
| Debt Interest | £116bn | More than defence budget |
| Defence | £83bn | Including foreign affairs |
| Public Order & Safety | £45bn | Police, courts, prisons, fire |
| Housing & Environment | £38bn | |
| Transport | £35bn | |
| Industry, Agriculture, Energy | £25bn | |
| Recreation & Culture | £13bn | |
| Foreign Aid (ODA) | £13bn | Of which £2.8bn spent on UK refugees |
| Other | £46bn |
Current Deficit: £112bn
NRSA YEAR ONE CHANGES
Revenue Changes
VAT cut: 20% → 15%
- Static revenue loss: ~£45bn
- Dynamic recovery (increased consumer spending): ~£7bn
- Net Year One cost: ~£38bn
Income tax: held at 20% in Year One
- No revenue loss. Cut to 17.5% in Year Two, 15% in Year Three.
- Phased to ensure savings materialise before cuts deepen.
Dynamic wage effects
- Minimum wage £12.21 → £15/hr (Year One), £18 (Year Two), £20 (Year Three)
- Higher wages → more income tax and NI receipts
- Estimated dynamic revenue gain Year One: £8-12bn
- Conservative estimate used: £8bn
Net Year One revenue change: approximately -£30bn
Spending Reductions — Year One
| Reform | Annual Saving | Mechanism |
|---|---|---|
| Outsourcing reduction (10% target) | £2.5bn | Cap on new contracts, insourcing plans |
| Consulting spend reduction | £0.8bn | PM approval required over £500k |
| Legacy IT savings (beginning) | £0.3bn | First FlameOS GOV replacements |
| Foreign aid: 0.5% → 0.15% GNI | £8.5bn | Ring-fenced for disaster relief only |
| Speech-to-text (police pilot) | £0.2bn | Officer hours returned to patrol |
| MH crisis teams (net saving) | £1.8bn | Police time freed minus team costs |
| Tech admin reduction (beginning) | £2.0bn | STT rollout across public sector |
| Total Year One savings | £16.1bn |
New Spending — Year One
| Commitment | Annual Cost | Notes |
|---|---|---|
| Carer pay: £86 → £200/wk | £7.8bn | 1.5m claimants at expanded eligibility |
| Nuclear programme (annualised) | £5.0bn | First tranche from Infrastructure Fund |
| Emergency services wage uplift | £5.2bn | Floor to £18/hr |
| Public sector min wage uplift | £6.1bn | 1.5m workers near current floor |
| Save Power Save Lives Phase 1 | £0.8bn | Priority Services Register solar/battery |
| Speech-to-text deployment | £0.1bn | Equipment and training |
| MH crisis teams (gross cost) | £0.8bn | Funded from police time savings |
| Total Year One new spending | £25.8bn |
Year One Net Position
| Amount | |
|---|---|
| Revenue change | -£30.0bn |
| Spending reductions | +£16.1bn |
| New spending | -£25.8bn |
| Net fiscal impact | -£39.7bn |
| Current deficit | £112.0bn |
| Year One NRSA deficit | ~£152bn |
This is higher than the current deficit in Year One. This is expected and planned for. The NRSA is front-loading investment — nuclear construction, carer pay increases, wage uplifts — while the efficiency savings are still ramping. The trajectory matters more than the Year One snapshot.
TRAJECTORY: YEARS ONE TO FIVE
Cumulative Savings Growth
| Year | Outsourcing | Tech Admin | IT Legacy | Foreign Aid | MH Teams | Total Savings |
|---|---|---|---|---|---|---|
| 1 | £2.5bn | £2.0bn | £0.3bn | £8.5bn | £1.8bn | £16.1bn |
| 2 | £5.4bn | £4.2bn | £1.1bn | £8.5bn | £1.9bn | £22.1bn |
| 3 | £8.7bn | £9.1bn | £1.8bn | £8.5bn | £2.0bn | £31.1bn |
| 4 | £12.3bn | £12.0bn | £2.4bn | £8.5bn | £2.1bn | £38.3bn |
| 5 | £15.8bn | £15.0bn | £2.9bn | £8.5bn | £2.2bn | £45.4bn |
Cumulative New Spending
| Year | Carers | Nuclear | Wages | Other | Total New |
|---|---|---|---|---|---|
| 1 | £7.8bn | £5.0bn | £11.3bn | £1.7bn | £25.8bn |
| 2 | £16.2bn | £5.0bn | £14.8bn | £3.2bn | £39.2bn |
| 3 | £23.4bn | £5.0bn | £18.2bn | £4.5bn | £51.1bn |
| 4 | £23.4bn | £3.0bn | £18.2bn | £4.5bn | £49.1bn |
| 5 | £23.4bn | £2.0bn | £18.2bn | £4.5bn | £48.1bn |
Note: Nuclear spend decreases as fleet standardisation reduces per-reactor costs. Carer pay reaches £500/wk target in Year Three and stabilises. Wage commitments stabilise at Year Three target levels.
Revenue Recovery
| Year | VAT Loss | IT Cut | Dynamic Wages | Energy Revenue | Net Revenue Change |
|---|---|---|---|---|---|
| 1 | -£38bn | £0 | +£8bn | £0 | -£30bn |
| 2 | -£38bn | -£12bn | +£14bn | £0 | -£36bn |
| 3 | -£38bn | -£24bn | +£20bn | +£2bn | -£40bn |
| 4 | -£48bn | -£24bn | +£22bn | +£4bn | -£46bn |
| 5 | -£48bn | -£24bn | +£24bn | +£5bn | -£43bn |
Note: VAT drops to 12.5% in Year Four and 10% in Year Five. Income tax cuts to 17.5% in Year Two and 15% in Year Three. Energy export revenue begins in Year Three as first reactors come online.
Deficit Trajectory
| Year | Savings | New Spend | Revenue Change | Net Impact | Deficit |
|---|---|---|---|---|---|
| Baseline | — | — | — | — | £112bn |
| 1 | £16.1bn | -£25.8bn | -£30.0bn | -£39.7bn | £152bn |
| 2 | £22.1bn | -£39.2bn | -£36.0bn | -£53.1bn | £165bn |
| 3 | £31.1bn | -£51.1bn | -£40.0bn | -£60.0bn | £172bn |
| 4 | £38.3bn | -£49.1bn | -£46.0bn | -£56.8bn | £169bn |
| 5 | £45.4bn | -£48.1bn | -£43.0bn | -£45.7bn | £158bn |
The deficit peaks in Year Three and begins declining in Year Four as efficiency savings compound, nuclear energy revenue materialises, and new spending commitments stabilise. By Year Eight-Ten, with the full nuclear fleet operational, energy export revenue at £4-5bn annually, outsourcing down 70%+, and all major capital programmes completing, the deficit trajectory crosses below the pre-NRSA baseline.
FUNDING MECHANISMS
National Infrastructure Fund
Ring-fenced capital budget for: nuclear construction, HSU4, Utilico acquisitions, Transitco capital, hospital restorations. Funded by sovereign bond issuance at government borrowing rates — not PFI at commercial rates. The interest rate differential alone saves approximately £2-3bn annually compared to equivalent private financing.
Utilico Revenue
As Utilico acquires energy and water companies, operational revenue offsets running costs and contributes to the Infrastructure Fund. By Year Five, Utilico’s net revenue contribution is projected at £3-5bn annually. By Year Eight, with energy exports, this rises to £8-10bn.
Efficiency Compounding
The critical fiscal mechanism: every pound saved on outsourcing, consulting, IT legacy, and structural duplication is a permanent, recurring saving. £2.5bn saved in Year One becomes £2.5bn saved every year thereafter plus additional savings from continued reform. The compound effect over ten years is £187bn in cumulative savings — not from cutting services but from eliminating waste.
THE HONEST ASSESSMENT
The NRSA increases the deficit in Years One through Five. This is the cost of front-loading investment in infrastructure, wages, and social provision. Any honest fiscal plan that proposes nuclear construction, carer pay reform, minimum wage increases, AND tax cuts will show a deficit increase in the early years.
The question is not “does it cost money?” — it does. The question is “does the investment generate returns that close the gap?” The answer, based on every comparable programme internationally (Korean nuclear fleet build, Scandinavian social investment models, Portuguese drug decriminalisation), is yes.
The deficit peaks and turns. The savings compound. The energy revenue grows. The tax base expands as wages rise. By the end of the decade, the country is spending more on services and less on waste, generating energy revenue, and running a smaller deficit than if the NRSA had never been implemented.
Every number in this document is on the dashboard. Every assumption is in the fiscal model. The sliders are public. Challenge it.
NRSA Red Book 2026. No Profit Before Service. Every penny visible.