UncategorizedOpinion: Budget 2018 falls short & key responses

Opinion: Budget 2018 falls short & key responses

Did Budget 2018 really deliver an end to austerity for the public sector? We review the budget and look at some of the main responses.

Budget 2018 was, for the most part, a strangely low-key affair. Despite his claims that this was a budget to mark the end of austerity, Chancellor Philip Hammond delivered very little meaningful, long-term content of note. Yes, most of his big announcements had already been made, but aside from the comment that “the hard work of the British people is paying off and austerity is coming to an end,” there was very little headline-making news. It was sensible Hammond at play, potentially with one eye on Brexit and the need for an emergency budget coming into play.

The new announcements Hammond did make were undoubtedly politically popular. The end to PFI projects, for example will set well, even though very few (or even no) projects are in the pipeline. A boost for high streets will go down well (but may have an impact on revenue for local government) and a new tax on the digital giants is undoubtedly popular.

Regarding the Digital Tax, UKFast CEO Lawrence Jones MBE, CEO of Manchester-based hosting firm UKFast says that it’s way beyond time for this action. He commented: “The Chancellor talks of the hard work of the British people, but the hard work of our businesses and workers is completely undermined when we lose billions of pounds in tax revenue from the US tech giants.

“It’s way beyond time for action on the pitiful amount of tax paid by the likes of Facebook, Amazon and Google, so I congratulate the Chancellor on taking this first step. If all UK businesses took advantage of the tax rules that apply to offshore businesses, the country would collapse. It’s the tax-paying entrepreneur that props up this country and it’s time for these tech giants to pay their share. As business leaders we have a responsibility to give back to the country and to nurture the community around us. I look at the UK’s booming tech industry and I’m proud of the way we are able to contribute, but it has to be a level playing field if we want to achieve the strong digital future that Hammond wants to see.”

Tech positive

On a positive note for technology usage, the Chancellor announced the creation of the Office for AI and Government Digital Service (GDS), which will review how government can use AI, automation and data in new ways to drive public sector productivity and wider economic benefits.

This will feed into the innovation strategy being led by the Cabinet Office. Furthermore, the Data Science Campus at the ONS and the GDS will conduct an audit of data science capability across the public sector, to make sure the UK public sector can realise the maximum benefits from data.

Public sector gains

On the face of it, the public sector seemed to be a winner in Hammond’s speech. The £20 billion for the NHS was re-announced once again (we’ve lost count of how many times this has been revealed). There was money for potholes, social care, children’s services and disability allowance. See our key points guide for all of the main announcements. Hammond also went as far as praising the contribution of local government when it comes to rescuing public finances. “Local government has made a significant contribution to repairing the public finances,” he said, adding that “local government has a vital role to play in delivering high quality public services for local communities.”

Yet, it’s likely the £400m additional money for schools, might cause more anguish than joy. Cash-strapped schools will not enjoy being told this is for “the little extras” when many are struggling for the very basics.

Falls short

In a nutshell, while any funding is welcome, this budget falls short and doesn’t spell out an end to austerity for the public sector and local government in particular.

The response from Lord Porter, Chairman of the Local Government Association (LGA) pretty much says it all. “Today’s Budget shows the Government has started to listen to the LGA’s call for desperately-needed investment in our under-pressure local services, but falls short of what we need in the long-term. Councils were at the front of the queue when austerity started so local services should be at the front of the queue if it is coming to an end.

“The LGA’s Budget submission highlighted the severe funding pressures facing councils in 2019/20. The Chancellor has acted to help tackle some of this immediate funding crisis with £650 million for social care which provides a financial boost for some of our local public services. While this funding will ease some of the immediate financial pressure facing councils and our local services, it is clear that this cannot be a one-off. Today’s funding is a start, but the real test will come in the Spending Review next year.

“Local government in England continues to face significant funding gaps and rising demand for adult social care, children’s services and homelessness support will continue to threaten other services our communities rely on, like running libraries, cleaning streets and maintaining park spaces. Councils also continue to face huge uncertainty about how they will pay for local services into the next decade and beyond.

“Investing in local government is good for the nation’s prosperity, economic growth and the overall health and wellbeing of the nation. We now look forward to working with the Government to ensure the forthcoming Spending Review delivers a truly sustainable funding settlement for local government, and its adult social care Green Paper puts social care on a firmer, long-term financial footing for the people who depend on care and support.”

Jonathan Carr-West, LGIU chief executive also shared some forthright views. He said: “Has the Chancellor saved local government? Or are councils being given hush money to quit complaining while we continue to mask the serious structural problems that have led to hundreds more newborn babies being put into care while elderly people are refused it.

“Instead of giving councils ring-fenced pocket money, the government needs to engage with the systemic funding problems in local government, find a locally responsive way of integrating health and social care and initiate a genuine conversation about how we fund local services.

“Local government finances are in such a desperate state that any additional money will help, of course, but attempting to plug the holes in the dam with specified pots of money from Whitehall is a cause of the problems local government faces not a cure for them.”

So, overall, it’s a case of thanks Chancellor, but your efforts fall short. Here’s to an eye on Brexit and the potential of an emergency budget early next year.

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