IES response to the 2018 Autumn Budget
29 Oct 2018
Responding to the Budget, Tony Wilson, IES Director, said:
‘There is much to welcome in today’s Budget, including more money for mental health services, the partial reversal of cuts to Universal Credit, a new careers guidance service through the National Retraining Scheme, and emergency cash for schools. Despite anaemic growth over the next five years, the Chancellor has managed to set out plans with lower borrowing, falling debt, and short-term spending increases and tax giveaways. Meanwhile employment will continue to break modern records and unemployment will fall to its lowest since 1974.
‘However, if this all sounds too good to be true, that’s because it mostly is. The Chancellor has benefited from a number of revisions to forecasts by the Office for Budget Responsibility – particularly around tax receipts and unemployment – which have given him £18 billion a year in headroom to fund commitments on the NHS and a range of smaller-scale and mostly short-term measures. The next five years will not feel like an end to austerity for most government departments, with funding virtually unchanged in real terms over the next Spending Review. And it will not feel like an end to austerity for low income households, with almost all of the future cuts to social security left in place.’
On Universal Credit, Tony Wilson, IES Director, said:
‘The announcement of increased investment in Universal Credit is welcome, but is the least that the Chancellor could have done. The restoration of around half of the cuts to “work allowances” – the amount of benefit that families can keep when they are in low-paid work – partially recognises the mistake made when this support was removed in 2015. The other half of the cuts remain in place, as does the freeze to benefit rates and a number of other welfare changes.
‘The Chancellor also announced a set of measures to take the sting out of Universal Credit rollout – with a further delay to the managed migration of claimants on existing benefits (which will save the government money) and new rules to allow those moving onto Universal Credit to keep two weeks of income. However, this is the second Budget in a row where the Chancellor has had to rescue Universal Credit – and these measures will yet again buy time rather than address the fundamental problems in how Universal Credit is assessed, administered and delivered.
‘Today’s forecasts suggest that Universal Credit will now finish rolling out at some point in 2025 – eight years late, and nearly two years later than was being forecast just six months ago. Without fundamental reform, we can expect more rescues and more delays.’
On increased funding for mental health services, Stephen Bevan, Director, Employer Research and Consultancy at IES, said:
‘The Chancellor’s announcement of £250 million a year of additional funding for mental health services is another welcome step towards so-called “parity of esteem” between physical and mental health in the UK. However, it is worth remembering that NHS spending is more than £100 billion a year, and while mental illness accounts for 23 per cent of the burden of disease in the UK it only has 11 per cent of the total NHS budget dedicated to it.
‘There are three areas where we would welcome more detail and a more explicit policy focus. First, access to mental health services for young people remains patchy. Three quarters of people with a mental illness are diagnosed by the age of 24 and we are increasingly concerned that services focusing on the needs of young people remain hard to access. Second, the mental health workforce is not yet in place, with an additional 21,000 posts needed but currently over 20,000 vacancies in England – so adequate staffing must be an urgent priority. And third, employment support must be improved. We welcome today’s increased investment in Individual Placement and Support (IPS), benefiting up to 55,000 more people. IES is leading the national evaluation of two of the government’s large trials of this approach and it is encouraging that more resources are going into a model that has been proven to work.’
On skills, Tony Wilson, IES Director, said:
‘The announcement of a new careers guidance service through the National Retraining Scheme is welcome. This needs to be a service for adults of all ages and targeted particularly at those in low-paid and less-secure work. It is also imperative that this works closely with, and builds on, the work of Jobcentre Plus and wider employment services.
‘The Budget has also reduced the costs of apprenticeships for employers that do not pay the Apprenticeship Levy, halving their contribution rate from 10 per cent to five per cent. This is great news for smaller employers.’
Interviews and further comment
Tony Wilson, Director of the Institute for Employment Studies, is available for interviews. Please contact:
Mark Jack, IES Communications Officer
Tel: 01273 763 435