No fiscal early-warning capability for AI-driven tax-base erosion

Income tax and national insurance supply nearly half of UK receipts, and DSIT's own assessment puts around 70 per cent of UK workers in AI-exposed roles, the highest of comparable economies because of the UK's services weighting. The OBR has explored AI productivity upsides and publishes no systematic displacement-driven downside fiscal scenario. No Treasury or HMRC workstream examines value migrating to US AI firms through low-tax jurisdictions, and no institution owns the question of what happens to UK receipts if white-collar labour income compresses.

Fiscal stress arrives before labour-market statistics register crisis, because hiring freezes cut receipts years before unemployment peaks. Without modelled scenarios, the Treasury will meet AI-driven erosion with ad hoc cuts rather than prepared instruments.

A mandate for the OBR to publish AI downside scenarios in its fiscal risks reports, and a standing Treasury and HMRC analysis unit on AI tax-base resilience covering wage-share shifts, profit attribution by AI firms, and evaluation of instruments such as a worker support levy.

// State-led: Instrument: OBR mandate change plus a standing HMT/HMRC analysis unit.

Half of receipts come from taxing the wages most exposed to AI and nobody models the downside; the fix is cheap and the erosion compounds slowly.