Post-Brexit Autumn Statement is first key battleground

July 14, 2016 at 14:20

This is not a reshuffle blog.

That probably means that it won’t be ready by many people today, because (and I am as guilty as anyone of this) reshuffles are exciting and we like to focus on the people in politics more than we do the boring policy stuff.

Of course personalities matter, but only to the extent that they shape the policy decisions that politicians make. It is on the policy issues that we need to keep focused as charities, particularly when it comes to the cross-cutting issues facing the sector.

Arguably, the biggest decision post-Brexit has already been taken – and it was taken even before Theresa May was elevated to PM and started to appoint her Cabinet.

It was the decision by the then Chancellor, George Osborne, to drop the budget surplus by 2020 target following the referendum result. This was then compounded by comments made by the new Chancellor, Philip Hammond, today:

“Of course we’ve got to reduce the deficit further but looking at how and when and at what pace we do that, and how we measure our progress in doing that is something that we now need to consider in the light of the new circumstances that the economy is facing.”

The straightjacket is loosened

Anyone working in policy since 2010 will tell you that the biggest straightjacket on policy development has been the deficit and repeated efforts under the Coalition and Conservative governments to get it down.

New ideas have often been blocked because of a lack of money. Programmes have been cut or change rushed through because of resource pressures. The deficit (and its impact on departmental budgets) has been the prism through which all decisions have been looked through.

Although dropping the target does not mean an end of austerity, it could have a big short-medium term impact.

It could avoid the need for tens of billions of cuts in this Parliament – or even permanently, depending on whether they reclassify investment in infrastructure/capital as part of the deficit target or not (as Hammond hinted at in terms of ‘measuring progress’).

What this change means is that there is now an opportunity to remake the case for investment in key areas, which politicians may be willing to consider given the need to boost Britain’s competitiveness and heal social divisions in the wake of a post-Brexit decision.

Although there are a lot of changes taking place in the machinery of government, the Autumn Statement remains the next big agenda setting event. So it will be the first key battleground in setting the priorities for the rest of the Parliament (bar an emergency budget) and charities need to prepare.

What are the priorities?

The big question facing the government will be what do they do with this additional room for fiscal manoeuvre?

Business will be calling for tax cuts to ensure the UK can compete in the world and to compensate for the increased volatility post-referendum. The previous Chancellor hinted at further corporation tax cuts after the referendum vote and already business representatives have called to cuts to business rates.

The other big area is infrastructure spending. Economists have consistently called on the government to use low borrowing rates to upgrade the UK’s transport infrastructure. Big infrastructure spending may also boost confidence in the UK economy, and the new Prime Minister is a supporter of HS2 (although not, Heathrow).

But what about social issues?

The referendum result appears to have highlighted the divisions in society and concerns about the benefits of growth not being shared equally. Moreover, public service reform has stalled in many places because of a lack of upfront investment, kicking the can (and costs) down the road for future governments.

The new PM appeared to recognise this in her speech yesterday on the doorstep of No.10 and in her leadership speech focused on the current government’s so called ‘life chances agenda’.

Charities are well placed to support social change, as NAVCA’s Chief Executive has made clear in a powerful statement yesterday.

We need to make our case in the Autumn Statement for the government to make sure that tax cuts or infrastructure spending are balanced by the need to invest in communities and support transformational reform to public services. Otherwise, there is a real risk that there will be little change on the ground for the beneficiaries we serve.

We need to present options

Ahead of the last Autumn Statement, CFG worked with a range of sector representatives to present policy options for government. We did the same at the Budget 2016. And we’ll be doing the same again for the Autumn Statement in November.

Last time we focused these proposals on the key issues facing our sector: governance, financial sustainability, assets and commissioning.

However, whilst there is a need to represent the needs of our sector – we also need to put these ideas forward as part of a bigger effort to make sure that heal the social divisions in the country and improve the life-chances of people across the country.

Whatever we do, proposals will need to be bold and eye-catching to stand out as everyone seeks to win the ‘fight for the future’ post-Brexit.

Get involved

We are going to be meeting with representatives soon to discuss what policies we should present ahead of the Autumn Statement. But we don’t have a monopoly of good ideas.

Let us know what you think the government should do to support our sector make social change either by leaving a comment below or emailing the Policy Team (policy@cfg.org.uk).