Autumn Budget and Comprehensive Spending Review 2021

On Wednesday 27 October, the chancellor delivered the Autumn Statement and three-year Spending Review. The Autumn Statement sets out the government’s short-term plans, while the Spending Review gives a multi-year view of policies and associated spending. It looks across all government departments and sets limits on how much each department can spend to meet the government’s strategic goals.

This week’s Spending Review promised to increase government spending by 3.8%, or £150bn, per year over the rest of this parliament (to 2024–25).

You can read our joint submission to the chancellor on the Charity Finance Group website (PDF).

Of particular interest to charities

The government has concluded its review of business rates, though reliefs are being kept under review. For charities that do pay business rates, freezing the multiplier in 2022–23 should provide further help. More frequent revaluation from 2023 should smooth out future increases, and a new 50% discount for retail, leisure and hospitality will benefit charities with retail premises. However, there are likely to be some organisations that will face higher bills.

The chancellor made several commitments to communities, including:

  • a £9m Levelling Up Parks fund, funding over 100 new parks in 2022–23
  • £850m for cultural and heritage institutions, along with an extension of the Museums and Galleries Exhibition Tax Relief to 31 March 2024
  • £700m for sports facilities and youth clubs
  • the first 21 projects to benefit from the £150m Community Ownership Fund (applications for Round 2 are expected to open in December 2021).

Following widespread opposition to removing the universal credit uplift, the chancellor announced that the universal credit taper rate would be reduced from 63% to 55% by 1 December. This means that, for every additional £100 that a person earns through work, their universal credit income will now be reduced by £55 rather than £63. The work allowance has also been increased to £500.

An analysis from Joseph Rowntree Foundation highlights the shortcomings of these proposals in light of the rising cost of living and end to the universal credit uplift. These measures will bring no relief at all to those who are not in work. This could result in an increased demand for support from charities.

There are also some considerations for charities’ cost base, including rising national insurance contributions and an increase in minimum and living wages.

The Charity Commission’s budget will rise from £28.3m in 2021–22 to £29.3m in 2024–25.

Levelling up

The Levelling Up White Paper is expected before the end of the year and should set out the government’s plans in much more detail. The chancellor did announce that £1.7bn towards local infrastructure projects has been awarded in the first round of the £4.8bn Levelling Up Fund. Many of these projects don’t appear to align with what people feel their communities need, as researched by NPC and the Law Family Commission for Civil Society.

We should also find out more about the UK Shared Prosperity Fund (UKSPF) in the Levelling Up White Paper, but the level of funding announced will be a cause for concern. Funding will reach £1.5bn annually by 2024–25, after scaling up from £400m in 2022–23 and £700m in 2023–24. This means that funding would have to significantly increase after 2025 to match equivalent EU receipts from 2021–27.

A significant amount of this, £560m over three years, will go towards a new numeracy skills programme, Multiply. While this scheme is welcome, and broadly fits the aims of UKSPF funding, it will inevitably squeeze available funding for locally designed projects.

Public services

The chancellor announced an additional £4.8bn in grant funding for local authorities over three years (£1.6bn per year). This is less than what the Local Government Association has called for. There’s also ongoing concern about the low proportion of funding allocated to social care from the Health and Social Care Levy.

The government has announced spending on health services, in part funded by the new Health and Social Care Levy. Announcements included 5.9bn for capital investment and £9.6bn for covid-19 measures, including the vaccination effort.

The government also intends to recruit 50,000 more nurses, offer 50m primary care appointments and undertake 30% more elective activity by 2024–25. Specific funding (£5m in 2022–23) has been allocated for research, treatment and technology to support the health of veterans.

The chancellor also announced other spending commitments for children and families, education, and the prison system. Funding has also been allocated to support survivors of domestic violence and sexual assault, and to tackle rough sleeping.

Net zero

With COP26 launching in Glasgow later this week, many had hoped that the chancellor would take this Spending Review as an opportunity to embed green policies across government. Instead, he announced lower air passenger duty on domestic flights and a freeze on fuel duty for the twelfth year in a row. Campaigners had hoped for more, eg road pricing, grants for electric vehicles and infrastructure, and research and development funding to continue to develop alternative fuels.

What was missing?

We welcome new spending commitments on sport, culture, and public services. We’re pleased to see that the chancellor has listened to charities by acknowledging the need to increase local government funding and make changes to universal credit. However, it’s clear that this week’s Spending Review will not be enough to support charities and communities to recover from the pandemic and build a stronger society.

The chancellor made little mention of charities or civil society, despite the very clear and vital role that voluntary organisations play in their communities and despite the government’s stated commitment to levelling up. Furthermore, there was no holistic consideration of how to achieve long-term and sustainable local government funding in order to deliver the public services that communities increasingly require.

In the forthcoming Levelling Up White Paper, we want to see a commitment to strengthening the voluntary sector and volunteering, including investment in social infrastructure, the creation of a Community Wealth Fund, and reform of the existing funds designed to support communities to level up.

Read our report on the role of charities and volunteers in levelling up.

 

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Sam Mercadante is our policy and insights manager working primarily on funding and finance policy.

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