The inflation estimate is the big one here. That puts pressure on BoE over interest rates which must be seriously in line for a rise. A 1pct hike would add £23bn to the UK borrowing total… and that’s before we get to the impact of 4pct inflation on cost of living. Independent analysis already suggests we can expect a stagnation of living standards for at least another 5yrs
- 4pct Inflation estimate (2pct is target)
- 5pct growth this year, followed by 6pct in 2022
- Return to sluggish growth from there
- Unemployment at 5.2% next year, lower than 11.9% forecasted
- 4pct wage growth since February 2020
- Borrowing as a percentage of GDP is forecast to fall from 7.9% this year to 3.3% next year
- Borrowing as a percentage of GDP will then fall in the following four years to 1.5%
- Public sector pay freeze ends on time
- Triple lock changes confirmed for this year
There is no doubt that the overall departmental spending allocations are above even the most optimistic estimates. Critics will suggest that 4pct increases do not undo 11yrs of austerity…but nonetheless this is a large increase in departmental spending power and a return to the Blair//Brown levels of departmental hikes.
- Total departmental spending is set to grow in real terms at 3.8% a year on average
- Cash increase of £150 billion a year
- largest real terms increase in overall departmental spending for any Parliament this century
Education & Skills
The big policy here is the return of SureStart under another moniker. The PR battle will be about Labour trying to highlight the policy reversals following their closure under Cameron vs the Tories pushing hard the nig investment in the first 1000 days
- £4.7bn by 2024-25 for schools
- £2bn of pandemic recovery funding
- Schools funding to return to 2010 levels
- £1.5k per pupil funding increases
- £300m will be spent on a “Start for Life” parenting programmes
- £170m by 2024-25 for childcare and payments to providers
- A UK-wide adult numeracy programme
- £104 million by 2024-25 for reforms to unregulated children’s social care
- £7 million by 2024-25 to improve access to adoption services
- £259 million for secure and open residential care home support
- £1.6 billion extra by 2024-25 for 16–19-year-olds’ education in England
- 29% real terms increase in adult skills funding
- £2.8 billion in capital investment in skills.
- increasing apprenticeships funding to £2.7 billion by 2024-25
- £900 million for each year of the SR period on work coaches
- £200 million per year Rashford Fund continues
- increases the hourly rate to be paid to early years providers for free hours offer
- £1.4 billion to deliver up to six million tutoring courses for disadvantaged pupils
Most of the big-ticket policies on healthcare had already been announced. Indeed, much of this is simply a revisit of what we have seen before. The big issue sin healthcare right now around GP access, hospital backlog clearances and staffing shortages remain for another day.
- NHS budget will rise above £160 billion by 2024-25
- £2.3 billion to transform diagnostic services
- £4.2 billion over the next three years for 40 new hospitals and 70 upgrades
- £5.4 billion funding to reform adult social care
- £86,000 for personal care costs cap
- Public Health Grant maintained in real terms
- £9.6 billion over the SR21 period for key COVID-19 programmes and related health spending
- £8 billion backlog clearance funds for hospitals
- £2.1 billion for NHS digitalisation
- £300 million to upgrade mental health facilities
- £5 billion over the SR21 period for life science research
- £40 million new money for social care research
- £30m for unrepresented groups research, such as midwifery
- £95 million for the Office for Life Sciences
- £33 million cv19 drugs funding
- £100 million to stop us all getting fat
- £66 million for new parent advice (breastfeeding and postnatal depression)
One of the key things here is what is not mentioned until the small print. The provision for big council tax increases is there and we can expect to hear Labour go on a £6bn council tax bombshell line for some time. However, the increased funding direct to local authorities is certainly to be welcomed and is again larger than most anticipated
- Real terms increase of 3% a year in core spending power
- £4.8 billion of new grant funding
- This is the largest sustained rise in core spending power in more than a decade
- £200 million for Supporting Families Programme
- Social care money is additional and separate
- £7.5 billion of unringfenced gainshare’ investment funding over 30 years
- Places for Growth programme = move 22,000 civil service roles outside London by 2030
- £37.8 million of additional funding for cybersecurity
- £34.5 million to improve transparency
- 2pct referendum threshold remains
- 1pct social care precept remains
As with healthcare, much in housing is already known. Some big money however going into cladding policy, which, combined with the Bill before the House, suggests some progress might be made on this.
- £1.8 billion extra investment in housing supply to get 1m new homes
- £11.5 billion investment Affordable Homes Programme (2021-26) reaffirmed
- 66pct of affordable homes expected to be outside London
- £5 billion funding to sort out cladding problems
- £639 million extra resource funding by 2024-25 to address rough sleeping
- 95pct mortgage guarantee
- £450 million to grow the heat pump market in England and Wales
- £338million to encourage private investment.
- Business rates exemptions and relief in England for eligible green technologies to support the decarbonisation of non-domestic buildings
- £950 million for the Home Upgrade Grant
- £800 million for the Social Housing Decarbonisation Fund
- £1.4 billion to help decarbonise the public sector estate in England
Perhaps the most interesting announcement here was the continued investment of the Government in building additional prisoner places. The stick remains as prominent in justice policy as the carrot
- £540 million by 2024-25 to recruit the final 8,000 police officers
- £150 million a year to continue programmes that prevent crime and keep communities safe.
- £18 million to tackle money laundering
- £785 million in 2024-25 to manage court backlog
- £200 million to improve prison leavers’ support to jobs and housing
- £477 million to fund the criminal justice system’s recovery from COVID-19
- £3.8 billion for 20,000 extra prison places
- £185 million for victim support
- £200 million on prisoner rehabilitation
- £75 million to improve prisoner tagging
Research, Development & Innovation
The government continues to go hard on R&D. The Dominic Cummings ARIA project continues to long outlive him.
- £20 billion across the UK, including to continue some EU programmes
- 25pct increase in real terms
- £1.1 billion per year more for universities
- fund full association to Horizon Europe
- £800 million for Advanced Research and Invention Agency (ARIA)
- UK to become the first country to launch a rocket into orbit from Europe in 2022
- Help to Grow schemes for 100,000 SMEs
- Made Smarter scheme for manufacturing SMEs
- £375 million Future Fund reaffirmed
R&D Tax Credits
- Refocus of reliefs to UK activity
- Plans to curb relief abuse to be announced later this year
- £1 million Annual Investment Allowance to 31 March 2023.
- Recovery Loan Scheme will also be extended until 30 June 2022
- £1.6 billion for the British Business Bank’s Regional Funds
- Start Up Loans to deliver 33,000 loans to entrepreneurs
Hard Hit Business Support
- Airport and Ground Operations Support Scheme (AGOSS) in England for a further six months
- Film & TV Production Restart Scheme
- Live Events Reinsurance Scheme.
- £42 million to support creative industries
- Vehicle Excise Duty (VED) for heavy goods vehicles (HGVs) in 2022-23 frozen
- HGV Road User Levy suspended for another 12 months
- 5,000 time-limited visas, additional HGV driver testing capacity
- £32.5 million to improve roadside HGV facilities.
- £240 million for the Net Zero Hydrogen Fund
- £1 billion for the Carbon Capture Usage & Storage (CCUS) Infrastructure Fund
- £1 billion Net Zero Innovation Portfolio
- £385 million Advanced Nuclear Fund for small and advanced modular reactor technologies
- £1.7 billion to help decide on future of large scale nuclear
- £120 million for a new Future Nuclear Enabling Fund
- £380 million for the UK’s offshore wind sector
- £140 million Industrial Decarbonisation and Hydrogen Revenue Support Scheme
- £160 million investment in offshore wind power hubs
- £27 million for the Aberdeen Energy Transition Zone
- £5 million for the Global Underwater Hub,
- £315 million for the Industrial Energy Transformation Fund
A lot of policies in here, but I personally believe infrastructure will not be what this Budget is remembered for. Big announcements, particularly on rail, are to come later.
- £100 billion of investment in economic infrastructure for this spending review period
- £5.7 billion for eight English city regions to transform local transport networks
- £830 million to West Yorkshire
- £1 billion to Greater Manchester
- £1 billion to the West Midlands
- £710 million to Liverpool City Region
- £570 million to South Yorkshire
- £310 million to the Tees Valley
- £540 million to the West of England
- 100s miles of new cycle lanes
- provide bike training for every child
- a new e-bike support programme.
- £3 billion of bus investment across the Parliament
- £1.2 billion for bus transformation deals in England
- £355 million new funding for zero emission buses.
- £24 billion between 2020-21 and 2024-25 in strategic roads
- £8 billion road maintenance
- £35 billion of rail investment over the SR21 period including
- HS2, Midlands and North priority
- £500 million to restore transport services lost in the Beeching cuts
- £13 million to develop proposals to re-open railway stations such as Wellington in Somerset and Cullompton in Devon
- £416 million to help commercialise low and zero emission transport technologies
- Multiple year Clean Maritime Development programme
- £180 million for sustainable aviation fuel (SAF) plants and a SAF clearing house
- £620 million extra for public charging in residential areas
- £817 million capital support for electrification of UK infrastructure
- £3 billion over the Parliament to support Bus Back Better and cycling schemes
- £1.2billion for bus transformation deals
- £355 million of new funding for zero emission buses
- £70 million Zero Emission Bus Regional Areas for announced areas
- £2 billion of investment in cycling and walking
- £710 million of new investment in active travel funding
Levelling Up & High Streets
The starting gun being fired on the LVF should see plenty more pushes for funding under this flagship scheme now….
- £1.7 billion via the first round of the Levelling Up Fund in 105 projects
- High Street Heritage Action Zone programme to continue
- £5 billion investment in Project Gigabit
- £180 million over the next three years for Shared Rural Network
- £850 million for cultural heritage preservation
A big win for certain key sectors here in terms of reliefs and exemptions, whilst the long overdue reforms are set to happen.
- £7 billion business rate cut
- 400,000 retail, hospitality and leisure properties will be eligible for new reliefs
- freezing the business rates multiplier in 2022-23
- From 2023, a new business rates relief will support investment in property improvements
- From 2023, exemptions for plant and machinery used in onsite renewable energy generation and storage
- New 100% relief for eligible heat networks, to support the decarbonisation of buildings.
- Consultation on online sales tax shortly
Labour clearly thinks this is the ground the government is weakest on. The NLW uplift is a flagship counterweight to that and the fact we can all get drunk cheaper is a good thing! But the inflation figure does cast a long shadow here. The government will push the UC taper very hard as it’s a massive, gift-wrapped win for the lowest paid in society.
- reducing the taper rate in Universal Credit from 63% to 55%,
- increasing the amount some can earn before UC drops by £500 a year
- 6% increase to the National Living Wage (NLW) to £9.50 an hour
- £900 million for each year of this SR on work coaches
- Restart scheme continued
- fuel duty frozen at 57.95 pence per litre
- duty rates on beer, cider, wine and spirits will be frozen for another year
- £500 million Household Support Fund…£421 million to Local Authorities in England
- £5 million in 2022-23 for research into surgery techniques for amputees
- The new fund will be administered by the Office for Veterans’ Affairs (OVA)
- £250 million to protect and restore nature in England
- £625 million extra for the Nature for Climate Fund
- £500 million in private finance to support nature’s recovery every year by 2027
- £30 million public investment in Big Nature Impact Fund
- £140 million to assess the extent and condition of the country’s natural habitats
- £300 million to implement free, separate food waste collections in every local authority in England from 2025
- Levelling Up White Paper by the end of the year,
- UK Shared Prosperity Fund (UKSPF) is the centrepiece of this ambition
- The UKSPF will rise to £1.5 billion a year by 2024-25.
- Cornwall guaranteed to receive what it did under EUSF
- Nationals also guaranteed to receive what they did
- UKSPF will support £560 million UK-wide adult numeracy programme
- £560 million in youth services in England over the next three years via Youth Investment Fund
- £200 million increase in funding for the Supporting Families Programme.
- 5 billion Affordable Homes Programme will deliver up to 180,000 homes
- £150 million to the UK-wide Regional Angels Programme
- £1.4 billion Global Britain Investment Fund for UK life sciences, offshore wind and automotive manufacturing sectors.
- 8 Freeports in 8 English regions,
- £35 billion of rail investment over the period
- Restoring Your Railway Fund continues
- £1.2 billion for bus transformation deals
- £355 million of new funding for zero emission buses
- £8 billion of investment for local roads maintenance and upgrades over this Parliament.
- £5.7 billion investment to deliver more London style transport integration cities
- Project Gigabit and the Shared Rural Network.
- £1.7 billion of allocations through the Levelling Up Fund announced
- £150 million Community Ownership Fund announced
- £9 million Levelling Up Parks Fund, funding over 100 new parks in 2022-23
- UK’s bids to host the 2025 Women’s Rugby World Cup and the 2026 Tour de France Grand Depart
- £2 million for Liverpool City Region Combined Authority for waterfront business case celebrating life of the Beatles
Defence and Security
- £6.6 billion in defence R&D spending
- 2% of GDP on defence in every year of the settlement
- APD cut for domestic flights
- Pandemic support extended to airports for 6 months
- APC ultra long-haul band introduced in 2023
- Simplification of alcohol duties, cut from 15 to 6 categories
- New system based on alcoholic strength
- All sparkling wines will now pay the same duty as still wines of equivalent strength
- A new, lower rate of duty on draught beer and cider will cut the rates by 5%
- £9m Levelling up Parks Fund to create 100 new parks
- £5.2 billion to better protect 336,000 properties across England from flooding
- £27 million extra to support flooding incident and emergency response activities
- £22m extra on flood defence maintenance
- £3.7 billion a year to farming
- £100 million investment in the UK Seafood Fund
International Aid and Overseas Matters
- 7% aid spending back in 2024-25
- £2.4 billion unlock finance for overseas green growth
- £1 billion of activities in 2021-22 on international climate action
- £3 billion target to protect and restore nature and biodiversity overseas
The Department of Health and Social Care (DHSC) settlement provides a £43.9 billion cash increase in core resource spending over the Parliament to £177.4 billion in 2024-25, which is equivalent to a real-terms growth rate of 4.1% on average over the SR21 period. Capital spending is set to increase by £4.2 billion in cash terms over the Parliament to £11.2 billion in 2024-25, which is a 3.8% real-terms growth rate over the SR21 period. As a result, the DHSC core capital budget will reach its highest real-terms level since 2010
The Department for Education (DfE) settlement provides a £18.4 billion cash increase over the Parliament to £86.7 billion in 2024-25, which is equivalent to a real-terms growth rate of 2% per year on average over the SR21 period. The settlement provides significant investment in skills and supports the government’s commitment to level up education, through additional funding for schools and a package of support to recover lost learning. SR21 confirms an additional £4.7 billion3 by 2024-25 for the core schools’ budget in England. This builds on the largest cash boost for a decade provided at SR19 – together this is broadly equivalent to a cash increase of over £1,500 per pupil by 2024-25 compared to 2019-20.
The Home Office (HO) settlement provides a £4.2 billion cash increase over the Parliament, to £16.5 billion in 2024-25, which is equivalent to a real-terms growth rate of 1.9% per year on average over the SR21 period.
The Ministry of Justice settlement provides a £3.2 billion cash increase over the Parliament to £11.5 billion in 2024-25, which is equivalent to a real-terms growth rate of 3.3% per year on average over the SR21 period.
The Department for Levelling Up, Housing and Communities (DLUHC) settlement provides a £2.6 billion cash increase over the Parliament to £8.9 billion in 2024-25,13 which represents an annual average 4.7% increase in spending above inflation.
Core spending power for local authorities is estimated to increase by an average of 3% in real terms each year over the SR21 period. This follows year-on-year real-terms increases since SR19.
The Department for Transport (DfT) settlement provides a £8.5 billion cash increase over the Parliament to £26.2 billion in 2024-2025, which is equivalent to a real-terms growth rate of 1.9% per year on average over the SR21 period.
The Department for Business, Energy and Industrial Strategy (BEIS) settlement provides a £10.1 billion cash increase over the Parliament to £23.8 billion in 2024-25, which is equivalent to a real-terms growth rate of 7.5% per year on average over the SR21 period.
The Department for Digital, Culture, Media and Sport (DCMS) settlement provides a £0.6 billion cash increase over the Parliament to £2.7 billion in 2024-25, which is equivalent to a real-terms growth rate of 2.9% per year on average over the SR21 period.
The Department for Environment, Food & Rural Affairs (DEFRA) settlement provides a £4.3 billion cash increase over the Parliament, to £7.0 billion in 2024-25, which is equivalent to a real-terms growth rate of 5.3% per year on average over the SR21 period.
The settlement for the Department for International Trade (DIT) provides a £67.6 million cash increase over the Parliament to £552.8 million in 2024-25, which increases DIT’s budget in real terms over the SR21 period.
The Department for Work and Pensions (DWP) resource settlement provides a £1.2 billion increase over the Parliament to £6.9 billion in 2024-25. This is equivalent to a real-terms growth rate of 1.3% per year on average between 2019-20 and 2024-25. The department will receive £1.5 billion in capital funding over the SR21 period. Total DEL rises to £7.2 billion in 2024-25.
The HM Revenue and Customs (HMRC) settlement provides a £0.9 billion cash increase over the Parliament to £5.2 billion in 2024-25, which is equivalent to a real-terms growth rate of 1.2% per year on average. The HM Treasury (HMT) settlement provides a real terms growth rate of 0.3% per year on average over the SR21 period.
The Cabinet Office (CO) settlement provides a real-terms growth rate of 0.1% per year on average over the SR21 period.