Hey, big spender?
Rishi Sunak’s first Budget as Chancellor on Wednesday afternoon was notable, as expected, for its focus on spending for a range of infrastructure projects, from roads to housing. What is similarly notable is that the public spending envelope set for the Spending Review – which Sunak confirmed will take place later this year – allows for little room for manoeuvre outside of the previously proposed funding increases for schools and the NHS. As the tax increases proposed in the Budget are relatively limited – apart from the expected changes on corporation tax and entrepreneur’s relief, and a new capital gains tax surcharge, there are few significant revenue-raising measures in the Budget – and the Government is sticking to the fiscal rules to which it committed in the Conservative manifesto (at least for now), it has limited flexibility to increase funding elsewhere for public services. Infrastructure spending may be receiving a boost, but most public services do not appear set to benefit in the same way any time soon.
Budget offers small hints at skills funding reform
One of the major absences from Wednesday’s Budget was any mention of the apprenticeship levy. While some reform should be expected this year as the Government reviews the policy, it received barely a mention in the document itself. Where there is a hint of some policy action is in the SME market – i.e. businesses offering apprenticeships not funded through the levy – with the Treasury committing to reviewing the funding available to smaller employers. A hearing held by Parliament’s Education Committee earlier this week had highlighted SMEs’ experience of recruiting apprentices as a particular challenge that the Government should address – including the mandatory 5% co-payment for SMEs towards each apprenticeship – and it appears as though policy-makers are starting to respond to these long-standing concerns. The promise in the Budget also to consult on the planned National Skills Fund – a potential source of additional funding for SME apprenticeships – offers an opportunity for those with an interest in this market to engage in the process of reform.
Extra £6 billion for NHS to contribute to recruitment efforts
Outside of emergency measures to increase NHS capacity to cope with the spread of the coronavirus and the extra financial resources currently being legislated for in Parliament, the Budget confirmed an additional £6 billion for the NHS over the next five years. This is intended, at least in part, to address specific workforce challenges. The high-profile election pledge to recruit more nurses, as well as ambitions in line with the NHS Long Term Plan to grow the primary care workforce in areas such as pharmacy are among the planned targets of the new funding, which is intended to focus on all areas of recruitment, retention and training of staff. Nursing, as expected, is the particular focus of new investment, but the plan to improve recruitment in primary care, including pharmacists, demonstrates where the Government is increasingly aware of resource challenges that are arising not only know, but potentially from future implementation of the Long Term Plan.
Jamie Cater, the brains behind a lot of GK’s thinking, leads our policy work across the entire business, supporting our strategic communications work and providing strategic advice to investors during M&A activity.