UK Budget fall out

I set out our immediate reaction to the UK Budget in Briefing 91 on Wednesday. In the light of day, the numbers are if anything slightly worse, although a real terms revenue cut of £199m, remains the bottom line.


The SPICe briefing calculates that the DEL Resource figures (that’s revenue or day to day spending) have increased by £347m over the period to 2020 compared with the plans set out in March. DEL Capital plans have increased by £509m over the period to 2021 compared with March plans. £1,115m in Barnett consequentials derive from Financial Transactions, which must ultimately be repaid to HM Treasury.


Overall, the DEL Resource budget will increase in cash terms in 2018-19 by 0.7%, which represents a real terms fall of 0.8%. This real terms figure is also based on a pretty optimistic view of inflation and the GDP Deflator in the OBR report. With CPI currently at 3%, getting down to 1.5-2%% next year looks overly ambitious.


We can also see who gains the most from this budget and it’s not the working poor. As JRF put it:
“Today’s announcement will help to ease the initial problems that many people face when moving over to Universal Credit, but the Government has decided to push ahead with big cuts to the amount of money people will receive. By failing to end the benefits freeze, the Government will oversee almost half a million extra people in poverty by the end of this Parliament. The Government’s big spending commitments for stamp duty giveaways and tax cuts prioritised higher earning households, with little support for people who need it most”


And it looks like any pay increase will have to be funded from existing budgets.

On public spending the IFS calculates that day to day spending on public services outside of the NHS is due to fall by yet another 7% over the next five years. Even the NHS is being squeezed as this table shows.

And no, austerity isn't coming to an end any time soon. The Chancellor clearly hasn't heard of the adage, 'when in a hole stop digging!'

The one positive from the UK Budget is the VAT exemption for police and fire services that provides around £37m extra for those services, but no backdating. There was an entertaining spat between the SNP and the Tories on this issue in the Scottish Parliament, but the truth is that neither of them have much to shout about.


In short, it was UNISON that first highlighted the risk of losing this exemption when national services were first proposed. The faces and frantic scribbling at the meeting, showed that few if any officials had considered this.


We were then told it would be sorted with HMRC and the Treasury. After some time and no response, we used Freedom of Information requests to tease out what was going on. It turned out that not only had the Treasury said that the s33 exemption would not apply, but the Scottish Government had been told that before they issued the final consultation.


We then proposed a way of structuring national services, which would have retained the exemption. However, that was also ignored by both the Scottish Government and the Tories who voted the Bill through.


As I said at the FBU lobby of parliament yesterday - the result is the loss of some £140m of revenue that could be used to keep emergency services going and award our members a decent pay rise.


So, the UK Budget wash up remains pretty grim - over to the finance secretary for the draft Scottish Budget on 14 December. Not an easy task as I explain in the Scotsman, and not made any easier by Wednesday’s smoke and mirrors.