Hi, I'm Mrs. Wheelhouse, and welcome to our series of lessons on maths and personal finance.

I'm really excited to look at this with you.

So let's get started.

By the end of today's lesson, you'll be able to explain how taxation and public spending can affect you.

Now, on the screen, you can one of our keywords we're gonna be using today.

Feel free to pause the video if you want to take some time to read through it now.

Our lesson is broken into two parts today.

We're going to begin by looking at public spending.

If your salary for the year is high enough, then you will pay income tax and national insurance on your earnings.

The amount of income tax and national insurance that you pay depends on how much money you earn in a year.

But where does that money go? It's a good question, Jacob.

Let's investigate.

In the Annual Tax Summary, the UK government states how it spent the money that individuals paid in tax.

Although everyone pays different amounts, the proportion of your contribution is the same as everyone else's.

So for example, if 10% of your tax was spent on education, then 10% of everyone's tax was spent on education.

The pie chart on the screen shows how tax collected between April 2022 and April 2023 was spent.

We can see that 20% of the tax collected was spent on welfare.

20% was spent on health.

And you can see that we're following the pie chart around clockwise as we move down the list of categories.

The other sector right at the end, includes things like government administration, housing and utilities, for example, looking after street lights.

It includes culture, so that's investing in sport, libraries, museums. Environment initiatives are there.

The outstanding payments to the EU.

Now, before April 2021, this was our contribution to the EU.

And there's also overseas aid in there.

So let's do a quick check.

Which sector or sectors had the most money allocated to them? Pause the video while you write down your answers now.

Welcome back.

You should've chosen welfare and health.

They have the largest sectors on the pie chart, so they had the most money allocated to them.

Each sector represented 20%.

Now, I paid 1072 pounds in tax during this tax year.

How much of my tax was allocated to education? Pause the video while you work this out now.

Welcome back.

Well, 10% went on education and 10% of 1072 pounds is 107 pounds and 20 pence.

It's now time for your first task.

On the next slide, you will see pie charts showing how the tax collected for three different years was spent by the UK government.

Use these charts to work out how much money from each collected tax was allocated to the three largest sectors each year.

So for question one part A, was what allocated if 4516 pounds was paid in tax, part B, if 10577 was paid in tax and part C, if 13794 pounds was paid in tax? Here are your pie charts.

So you may wish to go back to this slide.

Pause now while you write down those numbers.

And now use this slide in order to work out how much tax was spent on the three largest sectors each year for each different person.

Pause the video while you work on this now.

Welcome back.

Let's move on to question two.

On the previous slide, you saw pie charts showing how the tax collected for three different years was spent by the UK government.

Use those charts and your answers to question one to answer the following questions.

Part A, what sector received the most money? Part B, which area saw the biggest change in the proportion of money allocated to it? Why do think this was? And then in part C, imagine you are in charge of spending.

State which three sectors you would give the most money to and justify your choices.

Where would you reduce spending in order to make this happen? Pause the video while you answer these questions now.

Let's go through our answers.

So we're starting off by considering different amounts paid in tax and how much of that money went to three largest sectors each year.

So let's consider the year 2019 to 2020.

For part A, you can see welfare, health and the state pensions/education sectors were the largest and therefor, from the total tax I paid of 4516 pounds, 993 pounds, 52 pence went to welfare, 948 pounds and 36 pence went to health and 541 pounds and 92 pence went to the state pensions and the education.

For B, there was 2326 pounds and 94 pence to welfare, 2221 pounds and 17 pence to health and then 1269 pounds and 24 pence to the state pensions sector or the education sector.

And then finally in part C, we have 3034 pounds, 68 pence to welfare, 2896 pounds and 74 pence to health and 1655 pounds and 28 pence to the state pensions and the education sectors.

Feel free to pause the video at this point if you need more time to check the answers on the screen against your own.

Now for the year 2020 to 2021.

The three largest sectors here were health, welfare and the business and industry sectors.

So for part A, we 993 pounds, 52 pence to health, 903 pounds and 20 pence to welfare and 632 pounds and 24 pence to business and industry.

For part B, we had 2326 pounds and 94 pence to health, 2115 pounds and 40 pence to welfare and 1480 pounds and 78 pence to business and industry.

For part C, we had 3034 pounds, 68 pence to health, 2758 pounds and 80 pence to welfare and 1931 pounds and 16 pence to business and industry.

Again, feel free to pause the video at this point if you need some more time to check your answers against mine.

And finally, the year 2021 to 2022.

Our three largest sectors were health, welfare and then there was a tie again between state pensions and education.

Let's look at how the money was spent.

For part A, there was 1038 pounds, 68 pence to health, 903 pounds and 20 pence to welfare and 496 pounds, 76 pence to the state pensions and education sectors.

Part B, there was 2432 pounds, 71 pence to health, 2115 pounds and 40 pence to welfare and 1163 pounds and 47 pence to education and the state pensions sectors.

Then for part C.

We have 3172 pounds and 62 pence to health, we have 2758 pounds, 80 pence to welfare and 1517 pounds and 34 pence to the state pensions and education sectors.

Again, feel free to pause the video if you need to at this point to check your answers against mine.

Well done if you got those all right.

For question two.

I asked you what sector received the most money.

Well, across the three years on average, the health sector received 22% of the income from taxation.

Second was welfare, which received just under 21% of the income from taxation.

So well done if you put the health sector.

Part B.

The business and industry sector saw the biggest change in the proportion of money allocated to it.

It went from 4% in 2019 to 2020 to 14% in 2020 to 2021 and then went back down to 5% in 2021 to 2022.

Why do think this was? Now, this is just an example, but I said, "I think this increase in spending was in response to the global pandemic." Part C.

Now, you could've put anything here.

You had to state which three sectors you'd give the most money to and justify your choices.

Don't forget, you had to also state where you'd reduce spending to make this happen.

I said, "Well, my top three would be health, welfare and education as I think these areas are the most important to the greatest number of people and I would reduce defence in response." It's now time for the second part of our lesson, which is on the economy.

The economy is a system for distributing limited resources.

Resources, such as workers, land and raw materials, are limited, but the demand for them is infinite.

This is because people want more.

In some countries, the government chooses what to produce, how much and who to sell to.

In other countries, this is determined by supply and demand, how much a business can supply versus how much demand there is from the public.

Whenever you earn or spend money or don't, you are affecting the economy.

How a country's economy is doing can affect the lifestyles of the people who live in that country.

Quick check now, true or false? The economy can affect people's lifestyles.

Is that true or is it false? Pause the video and make your choice now.

Welcome back.

You should've said it's true.

A healthy economy normally means low unemployment.

That's definitely affecting your lifestyle.

The economy affects property prices as well.

When the economy is strong or healthy, which means there's low unemployment, low interest rates, et cetera, then the demand for property tends to increase.

More people look to buy property during this period, more mortgages are approved and house prices tend to increase.

Now, the opposite is also true.

When the economy is weak or unhealthy, so there's high unemployment and high interest rates, then the demand for property tends to decrease.

Fewer people look to buy property during this period, fewer mortgages are approved and house prices tend to decrease.

Let's do a quick check.

Each time series graph shows the data from the ONS, the Office of National Statistics, for the whole of the UK.

In 2008, there was a global financial crash.

Using the graphs to help you, describe how the global financial crash affected the average house price and the percentage of adults who were unemployed.

Pause the video while you think about this now and write down your answer.

Welcome back.

Now, you might've said something like this.

Around 2008, at the time of the global financial crash, the average house price in the UK decreased.

At the same time, the percentage of adults who were unemployed rose.

Well done if you wrote something like that.

It's now time for your final task.

Question one, the graph shows the average house price in the UK.

Investigate what factors may have affected the shape of this graph.

So you're going to need to do some research here.

Good luck.

Pause the video while you do this now.

Welcome back.

Here's an example of what you might have said.

So between 2005 and 2007, house prices rose steadily during this period and had been rising for around 10 years by this time.

It is likely that affordability is becoming an increasing issue.

Between 2007 and 2013, there was the global financial crash, which led to house prices dropping.

There is also high inflation in 2011, meaning less demand for houses as people don't want expensive mortgages.

From 2013 to 2016, the interest rates were low and the 2014 mortgage regulations meant stricter criteria for assessing a borrower's income.

Help to Buy was introduced in 2013 to help with the deposit needed to buy a property.

In 2016 to 2019, house price rise is slower here than before which could be a result of the UK voting to leave the EU.

2019 to 2022, the pandemic affected what people wanted from a property.

A stamp duty holiday and low, fixed mortgage rates meant spikes in prices were seen.

From 2022 to the present, economic uncertainty and fluctuating interest rates mean that the property market is not stable.

Government incentives to buy ended during this period.

Now remember, that was just an example of what you could've written.

You might have something similar, you might have something slightly different and you may have presented it in a different way.

You could still be right of course.

Well done.

It's time to sum up what we've looked at today.

Money gained through taxation is used by government.

This is known as public spending.

Taxation and public spending affect me and others.

Personal finances and public spending can be affected positively and negatively by the UK and global economy.

Well done, you've worked really well today.

I look forward to seeing you for more lessons in the future.

Goodbye for now.