Policy, Policy, campaigns & research

Autumn Budget 2017: a scandal of critical social needs left unaddressed

Our Policy and Public Affairs Manager, Daniel Ferrell-Schweppenstedde gives an in-depth view into what last week's budget means for the charity sector and the beneficiaries it serves

With the exception of some small announcements charities were largely ignored in the Autumn Budget 2017. We therefore looked at how people and communities on the ground could be better off as a result of the announcements. What social needs were addressed by the Budget? Improvements on benefits, housing and social care for example could really help millions of charity beneficiaries. Did the Budget deliver on that front?

A mixed bag and missed opportunities

Initial reactions across the sector were quite strong. There were a few ‘spots of light’ here and there, like £36 million of LIBOR banking fines to support Armed Forces and Emergency Services charities, small changes in Gift Aid, keeping small charities and social enterprises out of the VAT scheme by keeping the registration threshold at £85,000, as well as helping accident rescue charities to meet the cost of irrecoverable VAT (Accident Rescue Charities Grant Scheme).

But what about the real big opportunities that sector leaders had called for? Using £1bn of dormant assets to endow community foundations and unlock £40m per year for local grant-making? No mention. Addressing the looming Brexit funding cliff edge of more than £250m? The 2017 Conservative election manifesto suggested developing a ‘UK Shared Prosperity Fund’ to mitigate this issue. No word in the Budget on what the fund might look like. The Charity Commission finances did also not feature at all either.

So then: what were the major implications for their beneficiaries? After all, if people’s lives improve this is the whole point – and charities should feel this in their daily work as pressure on services decreases over time. Even with the most optimistic view, in some key areas the Budget left too much to be desired.

Benefits and universal credit – too little, too late

You don’t have to dig deep to find endless reports on the imminent crisis and state of the system. The Peabody Trust found that people having to wait 42-days for their benefits will leave 60,000 households including over 40,000 children with no income until after Christmas. The Trussell Trust warned that foodbanks will not be able to cope around the holidays because of the Universal Credit rollout.

The budget had some limited concessions to offer here. From February 2018 the seven-day waiting period will be removed so that Universal Credit starts on the first day of application. As of January 2018 up to a month’s worth of Universal Credit can be accessed within five days through an interest-free advance. Too late for Christmas, but will these changes actually help long-term, in particular in those areas were the roll-out just happened or is about to take place?

People receiving three-day emergency food supplies at Trussell Trust foodbanks have gone up from 347,000 in 2012/13 to 1.2m in 2016/17 – more than a threefold increase in 5 years! While Universal Credit might eventually help simplifying a myriad system none of the core issues have been addressed by the announced system changes – they are simply nowhere near good enough.

Homelessness – putting (some) money where your mouth is

Rough sleeping was high up on the agenda and for good reason – the national total increased 132% between 2010 and 2016! There is a commitment in the Budget now to halve rough sleeping until 2022 and to eliminate it by 2027. A Homelessness Reduction Taskforce will be launched working across government. £28m will be made available for three Housing First pilots in Manchester, Liverpool and the West Midlands providing accommodation and support for rough sleepers, and another £20m to support people at risk of homelessness.

But here comes the catch. Funding for the supported housing that is needed to make all of this happen is expected to come from local authorities. The councils are already stretched. The substantive increase in funding required to help them fulfil this task was nowhere to be seen. And how can the policy possibly ignore the expertise and role of charities (e.g. Crisis, Shelter, Salvation Army, you name it…) – which got no mention in the Homelessness Reduction Taskforce?

Housing – what crisis?

Heavily trailed in the run-up, the bricks and mortar policy announcements could be either seen with a ‘glass half-full’ or ‘glass half-empty’ attitude. The Budget had a lot on housing – like affordability funding, building new homes, and support for first-time buyers. Targeted Affordability Funding will receive an additional £125m increasing Local Housing Allowance rates. This is expected to help 140,000 people in areas where rent is raising fast.

The government wants to build new homes at the rate of 300,000 per year. An £8bn loan guarantee scheme for private building and another £2.7bn for a new Housing Infrastructure Fund will be introduced. In total, £15.3bn over the next five years will be provided, bringing support for housing to £44bn. The ‘golden nugget’ was that first time buyers will be pay no stamp duty on properties valued up to £300,000.

Grenfell was briefly mentioned, with £28m for victim support made available. But what about support to fix similar fire-safety problems elsewhere? There was nothing on how Government will ensure that tenants and community voices will not be further ignored to prevent a similar disaster in the future. Statements on how local authorities across the country could get funding to update their towers blocks with much needed sprinklers were also more than vague.

Ultimately, the real question is: what can local governments actually do to address the housing crisis? There was no big leap to transform the system. Local authorities can now charge a 100% council tax premium on empty properties, and there will be review of planning permission processes. There is some vague hope that the new loans scheme can be also used for affordable housing by housing associations. Peabody chair Lord Kerslake mentioned that this was yet another missed opportunity to invest in social housing. There are no real new powers for local authorities to make substantive investments – i.e. to actually address the housing crisis. Helping first time buyers doesn’t and tinkering with local authority processes doesn’t solve the fundamental problem.

Social care – kicked into even longer grass

Social care reform is a huge issue affecting millions of people and a huge chunk of the charity sector. Meanwhile social care charities are still threatened by a hefty £400 million bill in back-pay to care workers for sleep-in shifts. The Budget offered an emergency cash infusion of over £350m to help the NHS over the winter, in an attempt to buffer systemic problems caused by financial short-comings in social care.

Despite this, the much needed social care Green Paper promised in the Spring Budget disappeared. It’s farcical that this has now been kicked into 2018. Government can’t continue expecting one-off cash infusions to avert crisis. But how do we create a sound new policy with cross-party agreement? Knowledgeable charities are ready and willing to engage now.

CFG also pointed out that local councils are already overspending on children’s and adult social care. They will spend £4.4bn more, probably on core statutory services, over the next years. Instead of addressing the issue – social care reform and funding increases – reserves are depleting as a result. Spending cuts in other areas are likely to follow. There are huge risks in further inaction.

The economy and living standards – getting poorer for longer?

The economic analysis of the forecasting looks grim – we’re looking at an unprecedented two lost decades of earnings growth since the recession of 2008. Shortly before the Budget announcement the International Monetary Fund (IMF) cut GDP growth forecasts drastically, pointing to the impact of Brexit. The Office for Budget Responsibility (OBR) numbers reflected these adjustments as well.

If people are getting poorer does this also mean more will need more help from charities? The Joseph Rowntree Foundation reported that more than four out of five people who are expected to be pushed into poverty by the benefit freeze are in a working household. A lift the freeze on working-age benefits would have helped working families that struggle to make ends meet. And the Archbishop of Canterbury reported that majority of people attending the Church of England foodbanks are actually in work.

What it all means

In the end, maybe ‘it’s all about the economy, stupid’. Productivity growth, up-skilling and more (and better-paying) new jobs would help many in need of charity support today. There are high hopes for the government’s new industrial strategy, but a potential hard Brexit and a weak economic outlook are damping those hopes already.

Despite all that, Britain has a hugely educated and talented pool of people who can solve problems – many in the charity sector. Government needs to take advantage of their expertise and politicians need to stop trying to control everything. We shouldn’t accept that Brexit or a primary focus on the economy means we can’t make policy reform in these key areas. We need to think about solutions and stay positive in the face of adversity. In fact, our society can’t afford not to!

More information and analysis on the 2017 Autumn Budget from the sector:

Charities Finance Group (CFG): What do the latest Budget 2017 economic numbers mean for charities?