Autumn Statement - how it affects you

  • The Government has delivered its joint Spending Review and Autumn Statement
  • From increased funding for the NHS, to plans for 400,000 new affordable homes, there were a number of significant announcements affecting organisations in the public and voluntary sectors
  • Here, we outline some of the key announcements affecting local authorities, charities, social landlords, and health and education providers

Chancellor George Osborne’s surprise decision to scrap proposed cuts to tax credits may have been the most eye-catching announcement from the joint Spending Review and Autumn Statement, but there were a number of other important announcements affecting the public and voluntary sectors.

Headline announcements for the public and voluntary sectors

One of the key education announcements was the launch of a consultation on a national funding formula for schools, high needs and early years in 2016. There will also be £23 billion invested during the current parliament to open 500 free schools and refurbish another 500 schools. Sixth forms will also be able to become academies, enabling them to benefit from non-business VAT exemption.

Mr Osborne announced a doubling of the housing budget during this parliament, to £2 billion a year, and pledged 400,000 new affordable homes would be built by 2020. Housing associations will also be affected by the Government’s decision to cap housing benefit in the social sector to the same level as the private rental sector.

Extra funding to support 7-day NHS

The Government’s drive to fund a 7-day NHS will be backed with an increased NHS budget, up from £101 billion today to £120 billion by 2020/21. However, the NHS will also have to deliver £22 billion of efficiency savings. Other key health announcements include an extra £1.5 billion by 2019/20 to support integration of health and social care, and an additional £600 million for mental health services by 2020.

For charitable and voluntary sector organisations, Mr Osborne announced expanded support for Social Impact Bonds, with £105 million to be invested over the parliament to address issues including homelessness, poor mental health and youth unemployment. A new £15 million annual fund, equivalent to the VAT raised each year on sanitary products, will be used to support women’s charities.

For local authorities, Mr Osborne announced that local government spending, in cash terms, would be the same in 2020 as it has been in 2015. He also confirmed that local authorities will keep all revenue from business rates by the end of the current parliament, and announced an extra £10 million for councils to help homeless people.

Cuts will “take some councils to the edge”

Andrew Jepp, Director of Public Sector, Zurich Municipal, said: “The cuts announced in the spending review will take some local councils to the edge. While the Chancellor has thrown councils a bone by allowing them to levy an additional 2% to fund health and social care integration, abolishing the uniform business rate and giving councils the revenues, and creating new enterprise zones, the financial pressures continue to be immense. Local authorities can’t go bankrupt, but they can financially fail and the risk of this happening has been increased today.

“For years now, local authorities across the country have been doing all they can to tighten their belts and to be innovative with their approach to the new financial reality. In most cases, this has meant pursuing one of two strategies.

“Some councils have adopted completely new business models as a response to the reduced finance available. Others are looking into greater commercialisation as part of the solution, looking to innovative ways to realise income from assets that the council holds.

“Paradoxically, the financial pressures themselves aren’t the biggest problem facing councils. Most councils are having to step in to the unknown to become ‘Council-preneurs’ and have had to embrace risk in a manner like never before. This increases the potential for some of these risks to materialise with significant consequences that will only increase future pressure. We would urge all local authorities to ensure that they have robust plans in place to minimise and mitigate the risks of the change agenda.”

Here are some of the key announcements affecting the public and voluntary sectors.

Public and emergency services

  • Local government to keep all revenue from business rates by the end of the Parliament
  • Councils to receive extra £10m to help homeless people
  • Local government spending, in cash terms, to be same in 2020 as 2015
  • Introduction of a new statutory duty for the emergency services to collaborate by early 2017, subject to parliamentary approval, on areas such as procurement, new stations and vehicle maintenance
  • Bringing forward legislation to enable PCCs to take on responsibility for fire and rescue services, subject to a clear business case and local support, with local fire services providing the necessary information for PCCs to develop the business case
  • Local authorities who are responsible for social care to levy a new social care precept of up to 2% on council tax.

Education

  • Consultation to be launched on a national funding formula for schools, high needs and early years in 2016, with the new formula implemented from 2017-18
  • Schools’ budget to be protected in real terms
  • Investment of over £1.3bn up to 2019-20 to be provided to attract new teachers
  • Current national base rate of funding to be maintained for 16-19 year old students in school sixth forms, sixth form colleges and further education colleges in England
  • £23bn capital investment to be provided to open 500 free schools, provide over 600,000 additional school places, rebuild and refurbish over 500 schools and address essential maintenance needs
  • Sixth forms to be allowed to become academies, enabling them to benefit from the non-business VAT exemption
  • Higher education student maintenance grants to be replaced with loans
  • Tuition fee loans for higher level skills in further education and new loans for postgraduate Master’s degrees
  • Maintenance loans for part-time students from 2018-19
  • Abolish the cap on the number of student places for nursing, midwifery and allied health subjects.

Housing

  • Housing budget to double to £2bn a year
  • 400,000 affordable homes to be delivered in England by 2020, with 200,000 starter homes for first-time buyers at a 20% discount, and around 135,000 through a new Help to Buy: Shared Ownership scheme
  • Public land to be released suitable for 160,000 homes and unused commercial land re-designated for Starter Homes
  • Housing benefit in social sector to be capped to same level as private rental sector
  • Right-to-buy extended to housing association tenants.

Health

  • Department of Health’s budget cut by 25%
  • NHS to deliver £22bn of efficiency savings
  • NHS budget increased from £101bn to £120bn by 2020-21
  • Better Care Fund to receive an extra £1.5bn by 2019/20 to support integration of health and social care
  • Grants for health students replaced with loans and cap removed on the number of nurses and midwives going into training each year
  • Those with suspected cancer will be diagnosed or given the all clear within 28 days of being referred by a GP
  • £500m to be spent on new hospitals, including Cambridge, Brighton and Sandwell
  • £600m additional funding for mental health by 2020.

Charities and social organisations

  • Social Impact Bonds expanded, investing £105m to help deal with issues including homelessness, poor mental health and youth unemployment
  • While the EU is lobbied for a zero rate of VAT for sanitary products, a new £15m annual fund equivalent to the VAT raised each year on sanitary products will support women’s charities. An initial £5m will support The Eve Appeal, SafeLives, Women’s Aid and The Haven
  • Arts council funding to increase, helping maintain free museum entry
  • UK Sport budget to increase by 29%.