Public finances continue to improve…if Brexit does not jeopardise them
We heard from the Chancellor that public finances look excellent. Fiscal headway has increased and his Brexit is up from £15bn to £26.6bn due a lower borrowing forecast by the OBR. GDP growth is still lagging behind and has been adjusted to 1.2% for this year. Tax to GDP-ratio has not suffered from this, but mainly due to growth in earnings by the highest earners.
And there were strong and honest words around the impact of a no-deal scenario. MPs were urged to take this off the table, unless they want to see a smaller economy, less growth and employment and painful adjustments of the economy. A quick fix is not at hand. A disorderly Brexit represents the biggest short-term risk to OBR forecasts.
Some policy wins for campaigners
A significant win by campaigners was secured with real Hammond making real commitments to help ending period poverty and making funding available for sanitary products in secondary schools.
Charities working on youth and knife crime issues might welcome an additional £100m to be made available to tackle the issues – money that will go to funding overtime for officers work on the issue and knife crime reduction units.
Maybe some will also benefit from the new £260m of funding for the Borderlands region for areas in Southern Scotland and the North of England.
But that’s basically. The statement was labelled by some as a ‘non-event’. This was definitely the case for the charity sector.
No end to rise of demand for charity services
The opposition hit back hard. Austerity has not ended and was a political choice condemned by the UN as inflicting hardship on the most vulnerable, £1.9 million pensioners live in poverty and out of 4.1 million children living in poverty, around 3/4 are children of working parents.
Despite record job growth, the link between securing a job and lifting yourself out of poverty is broken they claimed.
Vulnerable groups like single mothers are not befitting from job growth, women make up well over 70% of people working in part-time work. Youth unemployment for minorities is well above the national average of 11.8%. The list goes on.
Funding cuts to local councils and public services have affected many people, in particular the most vulnerable in the most deprived areas. Meanwhile local councils face a further £1.3 billion in funding cuts in 2019/20. There was also no mention in the statement about the squeeze on benefits.
Charities have felt and continue to feel the effects of nine years of austerity policies due to ever rising demand on their services. Nothing has changed in this picture after this statement.
And any good news in the statement were massively overshadowed by the continuing Brexit uncertainty. OBR forecasts are based on having withdrawal agreement in place, a smooth transition period and the UK securing a future relationship with the EU that guarantees access to the single market – on at least similar or almost same terms that the UK holds now. Uncertainty remains high.
Will the sector be listened to for the spending review to deliver change?
Now the spending review 2019 has been confirmed. It is scheduled to be finished before the next autumn statement and looks at the next 3 years of departmental spending. Hammond said that if public finances continue to improve, funding for public services could be increased.
If Brexit does not jeopardise this prediction, he might be well-advised to listen to civil society and their knowledge on where to best spend the money. After all they know most about the situation on the ground. There is now a chance to do better than just a £1.6bn Stronger Towns Fund Brexit-bribe. We hope Hammond will pick it up.