Whilst the outcome of the Spending Review was not as bad as some feared: the Big Lottery Fund remains untouched; there are no cuts to the police budget; overall cuts to Departmental budgets are half what they were in the last Parliament, it would be wrong to say that austerity is over.
A better than expected forecast for tax receipts enabled the Chancellor to appease the fears of many of his backbenchers by scrapping his proposed tax credit reforms. Instead, tax credit changes will take effect as part of the introduction of Universal Credit. The Chancellor still expects to achieve the promised £12bn cut in the Welfare budget by the end of this Parliament. There will also be increased conditionality in JSA for young people, with mandated attendance at Job Centre Plus for the first three months.
There are further reforms to Housing Benefit, capping it at the Local Housing Allowance rate in the social sector as well as in the private sector. There has been an increase in the Temporary Accommodation Management Fee to Local Authorities. Otherwise, the impact on Local Authorities was not discussed during the Spending Review announcement itself, but includes a £41bn cut in Local Authority budgets overall. This was picked up on by commentators shortly afterwards, with Lord Porter, Chair of the Local Government Association saying that:
“Even if councils stopped filling in potholes, maintaining parks, closed all children’s centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.”
The Chancellor mentioned in his Spending Review speech that Local Authorities have increased their reserves by over £10bn in recent years, and they will be expected to draw on these reserves to meet any shortfalls. Local Authorities will be allowed to charge a ‘precept’ on Council Tax of 2%, ring-fenced to Adult Social Care, but this won’t meet costs fully. They will also be allowed to keep all business rate revenues raised in their local area.
As announced in the budget, an Apprenticeships Levy will be introduced for all employers with a payroll bill of over £3M. They will have to find a further 0.5% of their overall payroll for the Levy. Whilst this further funding for an important element of skills policy for young people is welcome, it will affect some large Housing Associations, who are already having to cope with the impact of the 1% rent reduction and the introduction of Right to Buy.
The Spending Review also confirmed that Housing Association debt has been moved to the public coffers. We have yet to understand the longer-term implications of this.
There was a further £600M increase in funding for mental health to fund talking therapies, perinatal and crisis care, and an upfront £6bn increase in NHS funding over coming years. Now might be a good time for Foyers to meet their local Director of Public Health to talk about the Healthy Conversations model as a way of engaging young people in the local public health agenda.
The National Citizens’ Service will be expanded to fund an additional 300,000 places by the end of the Parliament, but the rest of Cabinet Office budget is down by £26bn. It is important to remember that the Office for Civil Society, part of the Cabinet Office, is where youth policy now sits in central government terms. But the much-publicised ‘raid’ on the Big Lottery Fund’s budget failed to materialise.
Amid talk of a growing ‘crisis of home ownership’, and a raft of measures to help first-time buyers and others struggling to get on the property ladder, there was little to help those struggling to afford private rent, aside from a 3% increase in stamp duty on ‘Buy to Let’ purchases.
In all, then, things could have been much worse, but there is no end to public sector austerity. There is little in this Spending Review to alleviate the kind of poverty and social exclusion identified by the Joseph Rowntree Foundation and outlined in their annual report detailing the ‘definitive picture of poverty in the UK’, launched this year the day before the Spending Review announcement: https://www.jrf.org.uk/mpse-2015
Other good blogs on the Spending Review: