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The 2017 budget at a glance

Today the Chancellor stood up to deliver the first budget of the parliament and was forced to announce some pretty bleak projections for growth. The Office of Budget Responsibility (OBR) has slashed forecasts to 1.5% this year, and then following years will see growth of 1.4%, 1.3%, 1.5% and 1.6%.

At no point this parliament does growth reach 2%. This is a pretty big downgrade, and will doubtless be the headline that hangs over many of the policy initiatives announced.

Beyond that, there were a number of things announced that will be of interest to charities.

Health

There will be new money for the NHS in England—£2.8bn over the next three years. This is not the amount health organisations were clamouring for, but the biggest concern surely has to be the complete lack of any mention of social care.

Meanwhile the headline figure of £10bn for capital spending on health actually only consists of £3.5bn of new money. The bulk of this—£2.6bn—will go towards the capital costs of the Sustainability and Transformation Plans. This could be used to unblock plans to create new services in the community outside of hospitals, which charities may be in a position to get involved in. So possible good news there for charities delivering health outcomes, which is a broader range than you might think.

Housing

This budget was trailed as a budget to solve the housing crisis, and the headline figure of £44bn certainly sounds a lot. Again, only a portion of that is new money: £15bn. It’s also not clear what the precise mixture of loans, grants, and guarantees will be, and which parts of the housing market it will help. Still, that’s a decent chunk of money.

What is clear is that there was no new grant money for building affordable housing over and above what was announced at the Conservative party conference. And the largest single costing is on stamp duty, which even the OBR says will push house prices up. Abolishing stamp duty for first-time buyers is not going to get 300,000 homes built a year.

The devil will be in the detail, but any charities hoping for a major increase in provision of affordable homes and homes for social rent will be disappointed. Some ideas that were trailed, like the government directly commissioning homes, don’t appear to have made the cut. And the green belt remains firmly intact; just how you could build 100,000 new homes in Oxfordshire without touching that will be an interesting experiment.

There was some money for homelessness though, reflecting the current excitement around ‘Housing First’, with £28m for Manchester, Liverpool and the West Midlands to run pilots on this innovative approach.

Welfare

Movement on Universal Credit will abolish the 7 day wait and making it easier to get an advance payment. Existing housing benefit claimants will be able to keep payments for 2 weeks. Undoubtedly this will be welcomed by charities tackling poverty, but overall this pales into comparison with the cuts hitting work allowances that are causing real hardship.

Local authorities

Budget day has not been kind to councils in recent years, with some of the biggest cuts falling to local authorities to implement. Today there was some good news for some councils who will get in on the housing bonanza, with councils in high-demand areas being able to bid in to get extra borrowing capacity to build new homes. Overall this could cost up to £1bn.

But a bigger thing for charities to watch out for will be the effect of business rate changes, a core part of funding for councils. On the one hand, saving £2.3bn for businesses will hopefully give a boost to the economy. On the other, it could take a big chunk of cash away from councils already struggling to keep their heads above the water. Given the local council is often the partner of choice for many charities, any more funding being taken out could have pretty big consequences.

Other areas

Elsewhere the armed forces charities will receive the last of the Libor money, and international development charities may be affected by lower GDP growth, what with the 0.7% target being linked to GDP. There were some changes to gift aid announced, and £20m for ‘place-based cultural schemes’.

 

The Chancellor will be hoping this all adds up to more than the sum of its parts. Given the straitened times and drop in revenues he may well have done enough to keep his job safe for now.

But ultimately the £3bn set aside for the Brexit fund is a reminder of the challenge that lies ahead. If the economy worsens from some already pretty bleak projections there’s not really anywhere to go. Charities should continue to brace themselves—this may be the best it gets for the next few years.

 

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