Autumn Budget Response

In this post, VONNE CEO Jane Hartley gives her reaction to the Autumn Budget and an overview of what it means for the sector.
 
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The budget had little to directly impact on the voluntary sector.  It’s clear that Philip Hammond's budget was very much focussed on the economy, physical infrastructure and contained a clear message around supporting areas with Devolution deals and elected Mayors.
 
The biggest impact for our region is that the North of Tyne devolution deal was finally announced. It will see £600m of investment ‘North of Tyne’ over 30 years and create a new mayor elected in 2019 with powers over ‘important economic levers including planning and skills’. The Chancellor also gave the go ahead to finance a much needed fleet of new trains for the Tyne & Wear Metro to be in place by 2021.  £123m has been allocated to the South Tees Development Corporation for the clean-up of former SSI Steelwork’s site in Redcar in the Tees Valley Combined Authority area. A further £59m is being handed over to upgrade Teesside’s transport network. Tees Valley Mayor, Ben Houchen claims this is all new money and wouldn’t have been possible without the Devolution Deal.
 
Charity and local infrastructure 
  • There will be changes to Gift Aid from April 2019, simplifying the system and reducing the three current donation thresholds down to two.
  • Insurance premium tax rates have been frozen until at least 2022/23. This is good news for charities following speculation that a rise would be likely and that this in turn would result in charities having less money to spend on charitable activity.
  • Good news for smaller charities is that the VAT threshold for businesses will remain at £85,000, with a planned consultation to look at how its design could better incentivise business growth.  There had been speculation that this threshold would be significantly reduced to £20,000 in order to bring it in line with the rest of Europe, which would have affected smaller charities.
Health and social care 
  • No commitment was made to supporting social infrastructure and no mention of increasing spending on many key public services such as social care despite the social care system being stretched to crisis point. 
  • However, there was £10bn for capital investment to make Sustainability and Transformation Plans (STPs) more resilient and a further £2.8bn for the NHS. The funding is to help deliver integrated care for patients, better out-of-hospital care and reduce waiting times. Let’s hope this results in resources which will give STPs some teeth in order to drive system change and greater investment in hospital care and prevention.
Housing and homelessness
  • The Housing Revenue Account cap will be lifted for councils in ‘high-demand areas’ and stamp duty will be scrapped for most first-time buyers. The scrapping of stamp duty will apply to all first-time buyer purchases up to £300,000 and the first £300,000 of the price of properties up to £500,000.In total, the Government will commit at least £44bn of capital funding, loans and guarantees to support the housing market over the next five years and create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s.
  • The Housing Infrastructure Fund, which offers funding to local authorities on a competitive basis, will be more than doubled with a £2.7bn cash injection, there will be £400m for estate regeneration and a £1.1bn fund to unlock strategic sites.
  • Targeted affordability funding will be increased by £125million over the next two years, aimed at helping 140,000 people, in areas where private rents have been rising fastest. However, the proposed package is very small compared to the billions that will be put aside for housebuilding.  As it’s targeted at those on low incomes/benefits in expensive private rented accommodation, the feeling is the measures are more likely to benefit landlords than the renters themselves.
  • A Consultation is also to be launched on the barriers to long term tenancies in the private sector and how landlords can be encouraged to move in favour of these over less secure tenancies.
It is encouraging that as part of the Government’s commitment to halving rough sleeping by 2022 and eliminating it by 2027, Mr Hammond announced the establishment of a homelessness taskforce and investment of £28m in three new Housing First Pilots but a shame that none of them are in the North East. No mention was made of measures to tackle other forms of homelessness; for exmaple the “hidden homeless” (those turned away by local authorities and are disproportionately more likely to be from disadvantaged groups), nor does it address the problem of families living in temporary accommodation.
 
Brexit
  • £3bn has been set aside for Brexit preparations, including as contingency for the possibility of leaving the EU without a deal.
  • This is a significant increase from the initial allocation of £700 million, and simply reinforces the evidence that the Brexit process is a costly affair in itself pulling resources that could perhaps be better spent on public services. 
  • There was no mention of the promised ‘Shared Prosperity Fund’ referred to in the Conservative Party manifesto to replace the EU funding that currently benefits many VCSE organisations. Recent research by the Directory for Social Change suggests that UK charities risk losing £258.4 million in funding as a result of Brexit.
Universal Credit
  • The Chancellor referred to concerns over the operational delivery of Universal Credit, with £1.5 billion to make changes that are “necessary and overdue”. 
  • The seven day waiting period when applying for Universal Credit is being removed so that entitlement will begin on the first day of a claim.
  • Claimants who need an advance will be able to access a full months’ payment within five days of applying. It will be possible to apply for advances online and the repayment period will be extended from six to twelve months. 
  • New claimants in receipt of Housing Benefit will continue to receive this for a further two weeks (with the intention of “making it easier for them to pay rent”).
All in all, this is a positive move, particularly for charities who work with Universal Credit beneficiaries. The new proposals may also make it easier for some claimants to avoid eviction whilst waiting for Universal Credit.
 
The VCSE sector response to the Budget has been lukewarm and the shadow minister for civil society claimed the Government has ignored the sector, despite the recent announcement of a civil society strategy.