Mar 13th, 13:50
Blog 13th March 2019
In this week’s blog, I refer to: Spring Statement; Philip Hammond; Office for Budgetary Responsibility; Treasury; Brexit; Service Charges; Stronger Towns Fund; Theresa May; European Movement; European Union; Cumberland & Westmorland Herald; Housing Associations; Local Authority Housing Finance; Seminars & Training.
I have just watched Phillip Hammond deliver his spring statement that he described as:
“Another step on Britain’s road out of austerity.”
The Office for Budgetary Responsibility’s forecasts for economic growth are now 1.2% for 2019 (downgraded from 1.6%), 1.4% in 2020, and then 1.6% a year. These are historically low levels of growth. The Office for Budgetary Responsibility has also said that there is a ‘one in five’ chance that the economy will shrink next year.
Public borrowing is expected to be £29.3billion in 2019/20 and will still be at £13.5billion in 2023/24. Public debt was £1trillion in 2010, is now £1.75trillion (equivalent to 82% of Gross Domestic Product) although the government forecasts that economic growth will result in the debt representing only 73% of Gross Domestic Product in 2023/24. These are historically high levels of debt and they are increasing.
Graph showing increases in UK public debt
The Chancellor said that the government’s priority is to keep taxes low and he referred to planned reductions in income tax for thirty million people.
Assuming a Brexit deal is agreed and the uncertainty on our economy is lifted the Treasury will conduct public spending review before the summer. The Chancellor assumes that there will be a ‘Brexit dividend’ that he will be able to allocate between funding public services, investment in infrastructure and reductions in taxation. There would be a renewed focus on high quality outcomes. However, progress on public finances will be put at risk if there is a disorderly Brexit. He concluded that:
“I am confident that we are going to do a deal”
I am sceptical about the government’s chances of doing a deal that would satisfy both the European Union and the United Kingdom Parliament and sceptical about whether any Brexit deal could produce a ‘Brexit dividend’.
Increased funding was announced for some public services including:
These initiatives don’t appear very ambitious to me!
I was in Wales during the last week of February, presenting an in-house session of ‘All You Want to Know about Service Charges in Social Housing in Wales’ for a housing association. The session was received with delegates saying that they found the information provided relevant, that the quality of presentation was good and that the training met their needs fully. They described the session as useful, practical, interesting, thorough, clear and comprehensive.
Last week, the government launched the ‘Stronger Towns Fund’, a £1.6billion fund to boost growth and give communities a greater say in their future after Brexit.
The government says that the fund is part of their commitment to build a more prosperous economy that works for everyone. It will be targeted at places that have not shared in the proceeds of growth in the same way as more prosperous parts of the country. It will be used to create new jobs, help train local people and boost economic activity – with communities having a say on how the money is spent.
A total of £1billion will be allocated using a needs-based formula. More than half this share (£583million) will go to towns across the North with a further £322million allocated to communities in the Midlands. Another £600million will be available through a bidding process to communities in any part of the country.
Newcastle on Tyne Civic Centre, one of the Councils that may benefit from the Stronger Towns Fund
Local communities will be encouraged to come together to draw up proposals to restore pride and create new jobs in their area with Local Enterprise Partnerships playing a key role.
The government will also seek to ensure towns across Wales, Scotland and Northern Ireland will benefit from the new funding.
Announcing the Stronger Towns Fund, Prime Minister Theresa May said:
“For too long in our country prosperity has been unfairly spread. Our economy has worked well for some places, but we want it to work for all communities. Communities across the country voted for Brexit as an expression of their desire to see change – that must be a change for the better, with more opportunity and greater control. These towns have a glorious heritage, huge potential and, with the right help, a bright future ahead of them.”
My article on ‘Brexit and Economic Development’ (that was written before the Stronger Towns Fund was announced) has been published on the European Movement website. In it I argue that while the European Union has attempted to address inequality between different geographical regions of Britain, the actions of the United Kingdom government have increased those inequalities. Therefore, the United Kingdom government is unlikely to replace the European programmes that will be lost when Britain leaves the European Union.
To view the blog, please click here: http://www.europeanmovement.co.uk/brexit_and_economic_development
My letter on ‘Brexit and Housing Associations’ has been published in the ‘Cumberland & Westmorland Herald’ under the heading ‘Brexit will put the squeeze on social housing sector’. In it I argue that many people voted for Brexit because they wanted to protest about poorer communities being marginalised – including not having enough affordable homes. However, Brexit will make it significantly more difficult for housing associations to provide the increased number of affordable homes that are needed.
I am currently putting together our next seminar on ‘All You Want to Know about Local Authority Housing Finance 2019’ that will be held in London on 19th March 2019. This series of seminars gives an introduction and overview to this important subject and is fully up to date with all developments. It explains how the housing revenue account, housing general fund and housing capital programme work and considers the threats and opportunities facing local authority housing especially in view of the government's recent policy initiatives including the lifting of the 'borrowing cap'. The seminar is proving popular, but there are still a few places available.