The Social Market Foundation's response to the Autumn Budget and CSR follows below.
On the overall economic outlook and economic policy choices, SMF Research Director, Scott Corfe, said:
“Showing a continued departure from the economic doctrine of much of the past decade, the Chancellor has focused on spending increases over tax cuts as the tool for boosting the economy. We think this is a step in the right direction, and welcome today’s commitments to invest more in skills, infrastructure and programmes to support families.
“However, even this spending-heavy Budget may not be enough to address the UK’s economic challenges and behind the Chancellor’s optimistic rhetoric are signs of continued weakness ahead. The Office for Budget Responsibility expects employee pay to be broadly stagnant over the next three years, after adjusting for inflation. And economic growth beyond the coronavirus bounce-back remains below pre-financial crisis norms. The Government’s narrative about Britain moving to a high wage economy may come back to haunt ministers.”
On reforms to Universal Credit and in-work poverty, SMF Director, James Kirkup, said:
“This is a welcome, if overdue, acknowledgement of the need to support and encourage workers on low wages, too many of whom suffer in-work poverty. Since its creation, Universal Credit has lacked full Treasury support, unfairly penalising workers on low wages, so it’s good to see a Chancellor start to make amends.
“Around a fifth of children with at least one parent in work are growing up in poverty – letting those parents keep more of the money they earn is a good step towards addressing that.
“However, not all UC recipients are in work, and this welcome change won’t help non-working claimants who have seen the £20 weekly Covid uplift withdrawn and now face a bleak winter of rising living costs.”
On training and skills, SMF Senior Researcher, Amy Norman, said:
“The Chancellor’s own emphasis on skills as one of the main building blocks of this Budget shows the significant progress this Government has made in making skills and lifelong learning a political, social, and economic priority.
“The announcements on the National Skills Fund, T Level pupil funding, and apprenticeships are a welcome acknowledgement that investing in higher skills is essential to higher productivity and wages for the UK.
“However, there was little new funding announced in this Budget that has not already been set out before, particularly against the backdrop of a steep decline in adult education and further education funding over the past decade. That makes the detail of the Government’s upcoming Skills Bill and the response to the Augar Review a pivotal moment in its commitment to revolutionising skills in the UK.”
On alcohol duty, SMF Chief Economist, Aveek Bhattacharya, said:
“The Chancellor’s changes to the structure of alcohol duties are based on sensible principles, simplifying the system and better aligning tax rates to strength, but they fall short of producing a system that effectively targets and addresses harmful drinking.
It is positive that the Government has heeded the SMF’s calls for a lower rate of duty in pubs than supermarkets and off-licences, recognising that less harmful consumption occurs in the on-trade. However, it has continued to give unjustifiably favourable treatment to the cider industry, which will be taxed at half the rate of other producers.
Overall, the decision to freeze alcohol duties yet again – continuing a decade of real-terms cuts – may be more consequential than the structural reforms, and fundamentally at odds with the Chancellor’s promise of a ‘healthier’ duty system.”
On Net Zero, SMF Researcher, Niamh O Regan, said:
“After last week’s significant and ambitious Net Zero announcements, and ahead of COP 26 next week, the government continues to reaffirm its commitment to reaching net zero by 2050.However there was little in the way of new money for Net Zero in this Budget, which will only fuel suspicions that the Chancellor isn’t whole-heartedly supportive of the Prime Minister’s environmental agenda. That’s unfortunate, because Net Zero is a major economic opportunity for the UK that the Treasury should embrace.
It is difficult to hide behind announcements on zero emissions buses and investment in hydrogen when the Chancellor suggests the best way to travel domestically and improve UK connectivity is to fly. Cutting Air Passenger Duty on the eve of COP26 sends the wrong message about the UK’s Net Zero commitments.”
On support for children in their early years, SMF Researcher, Jake Shepherd, said:
“The Chancellor is right to look to support children to get the best start in life. His £500m pledge to the Start for Life programme and £200m per year investment to continue the holiday activities and food programme, alongside a bolstered commitment to education and youth services, are welcome.
“However, this is hardly generous – similar amounts have been allocated to the heritage sector, which is important, but not as important as children and their futures. So this is more of a missed opportunity than a moment of real change.
In the context of food insecurity and child hunger, the withdrawal of the Universal Credit uplift and the cost of living, this just isn’t enough. To build on these announcements, the government should, at the very least, consider widening free school meal eligibility to support the country’s most vulnerable children.”
On the freeze to fuel duty, SMF Research Director, Scott Corfe, said:
“Whether to increase, freeze or cut fuel duty is in many ways yesterday’s battle. With the shift to electric vehicles over the coming years, the government is set to lose billions of pounds in duty revenues, even if taxes on petrol and diesel were to increase.
“Fuel duty is a tax with a limited future. The focus now should be on introducing a new form of taxation on motoring – in particular a system of road pricing – not least to curb congestion and the environmental costs of driving.”
“It is disappointing to see the government continuing to dither on road pricing, especially given that SMF research suggests the public support it as a replacement for fuel duty”
On the UK Shared Prosperity Fund, SMF Research Associate, Linus Pardoe, said:
“The new UK Shared Prosperity Fund has been long-awaited and touted as a set piece component of the government’s levelling up ambition. It is positive to see that these funds will be utilised for vital initiatives like Multiply which will support some of the country’s most disadvantaged families.
“But the Chancellor’s announcement today is well below the funding levels of the EU Structural Fund which the UKSPF is designed to replace. In the first year it means just £6 per person under the new scheme, compared to more than three times that amount under the previous one. Not until the next election will the fund reach parity with the old EU system. It is therefore hard to understand how the government considers it a “centrepiece” of its ambition to spread opportunity throughout the country.”
On court reforms and upgrades, SMF Senior Researcher, Richard Hyde, said:
“The commitment to modernising the civil court and tribunals system is welcome. However, the programme has already faced substantial delays, with cost savings now expected to be lower than originally intended. Spending needs to be combined with better project management.
“The civil justice system and the civil law it implements are vital components of economic competitiveness .Court reform should not just be seen as purely a justice policy issue but an economic policy issue, too. Speeding up and lowering the cost of accessing justice could bring considerable long-run economic benefits.”
Notes
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