How the Spring Budget affects the public sector

  • Chancellor Philip Hammond has delivered the last ever Spring Budget
  • Additional funding for social care and free schools are among the headline announcements
  • We discuss what the Budget means for public and voluntary sector organisations

An extra £2bn for social care in England and £320m towards new free schools were among the key announcements in Chancellor Philip Hammond’s Spring Budget.

Overall, Mr Hammond’s tone was one of continuation rather than dramatic change, and this will have been welcomed by local authority leaders.

Andrew Jepp, Managing Director, Zurich Municipal

Here, we discuss the Budget announcements that could have the biggest impact on organisations in the public and voluntary sectors.

Social care

Mr Hammond announced an extra £2bn of grant funding for social care in England over the next three years, the first £1bn of which will be available in 2017/18. He also promised a green paper to address future social care strategy.

With increasing focus on the importance of integrating health and social care, Mr Hammond also announced £100m would be spent on triage services in English hospitals, to improve accident and emergency waiting times.

Education

The headline announcement affecting education was a £320m package to help fund 110 new free schools, potentially including grammar schools. A further £216m was pledged over the next three years for England’s state schools.

There were also a raft of other measures affecting education, including:

  • The introduction of T-Levels, a technical qualification which includes a three-month work placement for students aged 16-19
  • Free travel to selective schools for all pupils on free school meals
  • £300m to support 1,000 new PhD places and fellowships in STEM (science, technology, engineering and maths) subjects

It was also confirmed the Department for Education will still receive £1bn from a levy on sugary drinks that was announced in last year’s Budget, though this levy is set to raise less than originally forecast.

Business rates

Business rates reform has been a key focus of the Conservative government, which had previously announced that by the end of the current parliament, local authorities will be able to retain 100% of business rates raised locally.

In the lead-up to the Spring Budget, there had been considerable lobbying from businesses for Mr Hammond to ease the burden from higher business rates.

Instead, he announced a range of measures to limit the impact of higher business rates, including a £300m hardship fund for local councils to offer discretionary relief for the worst affected businesses.

Devolution

After pledging that local areas across Britain would be able to “take control of their economic destiny”, Mr Hammond announced a deal had been reached with the Mayor of London, Sadiq Khan, on further devolved powers for the capital. He also revealed a Midlands Engine Strategy would address barriers to productivity across the Midlands.

In his speech, the Chancellor also announced an additional:

  • £350m for the Scottish Government
  • £200m for the Welsh Government
  • And almost £120m for the incoming Northern Ireland Executive.

Transport, infrastructure and other announcements

Mr Hammond pledged £220m would be spent on addressing pinch points in the national road works, including £90m for the North of England, and £23m for the Midlands.

He also revealed that the Transport Secretary, Chris Grayling, would shortly be announcing details of a £690m competition for local authorities across England to tackle urban congestion.

There was little in the Budget directly concerning the voluntary sector, besides confirmation that £12m from the so-called ‘tampon tax’ will go to women’s charities.

Andrew Jepp, Managing Director, Zurich Municipal, added: “The Chancellor’s announcements on additional funds for the devolved nations, discussions with the Mayor of London on further powers for the capital and renewed commitment to metro-mayors, will have been well-received, but councils will want to see concrete commitments to extend the Government’s devolution agenda.

“Overall Mr Hammond’s tone was one of continuation rather than dramatic change, and this will have been welcomed by local authority leaders. But councils are dependent on growth to continue to deliver essential services.

“With the triggering of Article 50 likely to create more uncertainty and the slightly improved Office for Budget Responsibility projections on economic growth over the coming years, chiefs will be under no illusions that that there are more tough months and years to come.”