“Steady as she goes”, might have been the motto for the Chancellor’s speech yesterday. But this was a speech drained of options and courage by the chilly winds blowing from the continent and our forthcoming exit from the EU.
All the civil servants’ time, effort and brains appear to have been sucked into Brexit issues, leaving an unimaginative response to some of the most significant challenges people are currently facing. Both the Chancellor and the OBR have had to admit that, in Robert Chote’s words, forecasting the immediate future is “far from straightforward”.
A braver government would have looked at whether it was right, in the new economic situation, to stick with the “triple lock”
for pensioners and also to ignore the detrimental impact on the NHS that cuts to the social care budgets have had. We cannot continue to treat health as separate from social care, so we either need to significantly increase funding for the latter, or enable health funding to be used directly for social care services with the explicit purpose of relieving the pressure on the NHS. Our health and social care lead, Matthew Wort, has commented further here
The central message for our clients in the voluntary and public sectors is that there is no real change to the austerity programme, and the government remains committed to further savings in 2019-20. The extra leeway from the relaxation of the fiscal charter has partly been used to fund infrastructure, and partly been kept in the Chancellor’s back pocket in case the impact of Brexit turns out to be worse than feared…
There were some lighter notes and some announcements of specific interest to you – our clients and partners. The additional £1.4bn announced for affordable housing was helpful and, potentially more significantly, the freedoms that bidders will have to use the funding to build homes for affordable rent, not just shared ownership and rent to buy. London, in particular, seems set to benefit from additional housing starts. The devolved administrations too will have greater resources through the Barnett formula. Interestingly, there is to be a further pilot during this parliament of the voluntary right to buy, again funded by the government, for 3000 homes – suggesting a national “roll-out” might still be a few years away.
Community-based housing providers, including community land trusts, co-operatives and almshouses will be pleased to see the extension of their exemption from the 1% social rent cuts for the full period. This had been the subject of extensive lobbying from the sector and will help protect the smaller community-led initiatives.
Devolution is set to continue, with deals in the pipeline for the West Midlands, London, Swansea, Edinburgh and Stirling to build on those already concluded, and an offer to listen to proposals from North Wales. Those who travel on trains to our offices might also be pleased to note the funding for the “Midlands Rail Hub”!
The national living wage and national minimum wage rates are set to rise, with additional funding for enforcement. This will have an important knock-on effect on care providers and other providers of already squeezed public services, with no indication of any further support to local authorities to compensate. HMRC are already taking a much more challenging position as detailed in our recent briefing here.
For charities and third-sector organisations, there was some good news with the extension of the tax relief for museums and galleries, and in particular the expansion of Social Investment Tax Relief to allow social enterprises to raise investment of up to £1.5m (though limiting the new higher limit to organisations less than 7 years old is a curious decision). There was also confirmation of funding to support the expansion of grammar schools, which indicates that despite the political storm that this created, this policy is set to continue.
And finally – buried in the detail of the documentation, you will also find the note that dealing with the process of Brexit – paying for “trade policy capability” and to “support the re-negotiation of the UK’s relationship” – is now projected to cost £412m during this Parliament. It is, as they say, an ill wind…
Read Vic Rayner's blog on the Autumn Statement -