The Spring Budget and what it means

Chancellor Philip Hammond has presented the 2017 Spring Budget, with the announcement of an additional £2 billion to be spent on social care over the next three years.

Social care funding - too little too late?
To help councils to provide high quality social care to more people and help to ease pressure on the NHS, Hammond announced an additional £2 billion of grant funding for adult social care over the next three years, with £1 billion available in 2017/18.

Much of the build up to Hammond’s last Spring Budget, before it becomes the Spring Statement, was focused on increased social care funding to alleviate the crisis currently facing the sector. The Liberal Democrats had called for an extra £4 billion emergency funding in the Budget for the NHS and social care services, calling for a new deal for ‘our NHS and care services’.

Additionally, according to a Local Government Association survey, 78 per cent of MPs said before the address that additional funding should go to councils' social care budgets, saying that the funding gap facing social care is at least £2.6 billion by 2020.

Margaret Willcox, president elect of the Association of Directors of Adult Social Services (ADASS), said: “We welcome this important step towards closing the growing gap in government funding for adult social care. We are keen to build a consensus on a long-term, sustainable solution about how we provide and pay for care for years to come, and we hope the Green Paper helps to achieve that.”

Jonathan Carr-West, chief executive of LGiU, said: “The good news is that the Ggovernment has listened to the local government sector and made more money available for social care. It's not nearly enough, of course, so the government is right that this is a short term measure and that we need more fundamental reform of care funding and delivery.

“The bad news is that the focus of this additional money makes that reform harder. Social care is not just about freeing up hospital beds, it’s about managing the overall well being of the people who live in a place. That connects with health care but also with housing, keeping people healthy, management of public space and local economies.

“That’s why social care can only be delivered by local bodies not by national agencies. So we need to fund local government to deliver social care but then we need to trust it to spend the money locally across the system in the ways that work best for that area. Micromanagement of how the money is spent will be expensive, ineffective and a step in the wrong direction.”

However, to the disappointment of many local authorities, only £2 billion has been made available over the next three years, alongside £425 million of investment in the NHS, also over three years.

Business rates boost and tax promise turn-around
Perhaps the biggest news from the Budget coming directly from the Department for Communities and Local Government is a £435 million package to support businesses affected by the business rates relief revaluation, with plans put in place to ensure that no small business coming out of small business rates relief will pay more than £600 more in business rates this year than they did in 2016-17.

Funding for local authorities will allow them to provide £300 million of discretionary relief to provide help to businesses most affected by the revaluation, while pubs with a rateable value up to £100,000, calculated at 90 per cent of pubs, will be able to claim a £1,000 business rates discount for one year from April. Communities Secretary Sajid Javid is expected to reveal further a funding formula ‘in due course’.

Mike Cherry, national chairman at the Federation of Small Businesses (FSB), said: “FSB welcomes the fact that the Chancellor has listened to the small business-led campaign on business rates. The £435 million of new money is a direct and much-needed response to those facing astronomical hikes in their business rates. This immediate relief is vital in the short-term, and action on more frequent revaluations will also help. But this tax remains out-of-date, so today we call for a cross-party Commission to create a simple, fair tax system for a modern economy.”

Millions of self-employed people face an unwelcome tax rise of two per cent in National Insurance Contributions (NICs) as Hammond addressed the difference in contributions between those who are self-employed and those in employment, marking the difference as ‘no longer justified’.

Class 4 NICs will increase by one per cent in April 2018 and by one per cent in April 2019, costing a self-employed worker an average of 60p more a week in tax. The money generated would ‘support our public services and improve the fairness of the tax system’.

Controversially, the Conservative election manifesto in 2015 stated that under a Conservative government there would be ‘no increases in VAT, Income Tax or National Insurance’.

Free school funding
There was also important news for the education sector in the Chancellor’s speech, with £320 million made available for new free schools, traditionally set up by groups like parents, charities or community and faith groups. A further £216 million will be invested in school maintenance.

But while there was the expected boost for grammar schools, teaching associations were quick to question where extra funding was for existing schools, with Russell Hobby, general secretary of school leaders’ union NAHT, saying that the Budget represented a missed opportunity for schools.

He said: “We heard that extra funding will be found to deliver more grammar schools, but nothing will be provided to existing schools. Schools are in a funding crisis now, and opening more free schools will do nothing to change that.

“For many schools, this Budget was their last chance. In our annual Breaking Point survey published in January, 72 per cent of school leaders told us that their budgets will be unsustainable by 2019. For them, this Budget was a chance to address this, and they will be bitterly disappointed by the total absence of extra money for schools.”

Free school meals, a big topic in the previous Conservative Parliament, also was noted by Hammond, who revealed that children aged 11-16 who receive free school meals or whose parents are on the Maximum Working Tax Credit will get free transport to their closest selective school, but only if it is between two and 15 miles away from their home.

There was also a further announcement on Tax-Free Childcare, which will provide up to £2,000 a year in childcare support for each child under 12 and soon be available to working parents. Parents will be able to receive up to £4,000 for disabled children up to the age of 17.

Technology boost for Industrial Strategy
Hammond announced investment of £270 million to launch the Industrial Strategy Challenge Fund. Initial funding will support research and innovation to: develop artificial intelligence and robotics that will work in extreme environments, like offshore energy, nuclear energy and space; design and manufacture better batteries for new electric vehicles that will help improve our air quality; and improve medicine manufacturing technologies to speed up patient access to drugs.

As expected, Hammond also confirmed a new £16 million strategy to make the UK a world leader in 5G technology, as well as a £200 million funding pot for local projects to build fast and reliable full-fibre broadband networks.

Better transport links
The government has continued to commit to funding improvements for transport infrastructure, with Hammond announcing £690 million for new local transport projects, especially those that will improve congestion on roads and public transport, and help alleviate the current air pollution problems in the UK.

A further £220 million is made available to improve congestion points on national roads, with £90 million going specifically to the North and £23 million to the Midlands.

Commenting on the announcement, Claire Haigh, chief executive of Greener Journeys, the sustainable transport campaigning group, said: “Congestion is strangling towns and cities across the UK, bringing urban centres to a standstill and costing the economy more than £13 billion each year. We are delighted the Chancellor has acknowledged the severity of this problem, and await with interest further details of the £690 million fund to ease traffic on the worst pinch points in local transport networks.

“This funding is a step in the right direction. But if this Government is serious about tackling congestion, and confronting the emerging public health threat caused by roadside air pollution, it must have the courage to confront the root cause of the issue - rising car use.

“While fuel duty remains frozen and the cost of driving remains low, we can only expect traffic and pollution levels to get worse. Only by raising duty and the cost of driving the dirtiest diesel vehicles can we encourage people out of their cars and tackle the congestion and air quality problems once and for all.”

Dodging devolution?
Devolution to London was given a boost by hammond in the Budget, with new powers handed down to the capital by the government, but little was said for other regions in the UK. There will be extra flexibility in the capital to allow the voluntary pooling of business rates across the city, while more powers over health, infrastructure, transport and employment will be handed over. Mayor of London Sadiq Khan is expected to reveal more soon.

Claire Kober, chair of London Councils, said: “Alongside Greater Manchester, the West Midlands and other regions of the country, the capital is proud to be at the forefront of devolution. As we’ve long argued, this promises local people the power to set out a new path for delivering both economic growth and excellent public services in the context of a continued squeeze on public finances.

“However, despite today’s positive news, we believe that there is more room for further transfer of power to both London and cities across the UK, and we will continue to argue the need for government to properly fund public services.”

Further Information: 

https://www.gov.uk/government/speeches/spring-budget-2017-philip-hammonds-speech

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