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Policy briefing 5 July 2010
(22 June - 5 July 2010)
The release of the 2010 Budget on 22 June has given an indication of the austerity to come under the Coalition Government.
The decisions within the budget have caused consternation, especially the fact that overall savings are to be made up of 77% cuts and only 23% tax increases (or 85% savings and 15% taxes if you only take into account new measures).
Meanwhile, economic growth forecasts were downgraded by the Office for Budget Responsibility to just 1.2% in 2010/11 and unemployment is set to peak this year at 8.1%.
Significant measures introduced via the Budget include a rise in VAT to 20%; benefits linked to the Consumer Price Index (which excludes the cost of housing); £11bn to be saved from the benefit bill overall; Housing Benefit cut by £1.8bn a year; child benefits frozen; RDAs to be abolished; and government departments asked to produce 25% in efficiencies.
Spending on the NHS is set to increase, overseas aid will remain unaffected and spending on schools and defence will also be protected from the worst of the cuts. This may leave unprotected departments seeking cuts of closer to 33% - a third of departmental spending.
Points of respite in the budget include the increase in NHS spending; protection of international aid; measures to encourage small business growth outside the South-East; a levy on banking liabilities to discourage risky financial practices; and increased accountability around government contracts.
The Chancellor of the Exchequer also announced that the full Spending Review will be released on 20 October 2010.
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Political
Former Labour minister Will Hutton has been tasked with producing an Independent Review of Fair Pay in the Public Sector. The Review will investigate pay scales across the public sector and make recommendations on how to ensure that no public sector manager can earn over twenty times the lowest paid person in the organisation.
Alun Michael, Labour and Co-operative MP, patron of Volunteering England, and former minister for the voluntary sector has been elected chair of the All-Party Parliamentary Group on the Community and Voluntary Sector.
As part of the Government’s transparency agenda, the Cabinet Office has published details of everyone working in Non Departmental Public Bodies/Quangos, who earns more than £150,000.
BIS have launched a £1 billion Regional Growth Fund to help those areas most dependent on public sector employment to make the transition to private sector-led growth. The fund will operate between 2011 and 2013 and both private bodies and public-private partnerships will be able to bid for funding by demonstrating that their proposal will bring private investment and sustainable private sector jobs in their area.
Business Secretary Vince Cable and Communities Secretary Eric Pickles have sent a joint letter to councils and business leaders asking them to consider forming Local Enterprise Partnerships (LEPs) to provide strategic leadership and create an environment for private sector-led economic growth in their locality.
A new committee tasked with reducing regulation on businesses has begun a major review of business regulation. The committee proposes to operate a ‘One-In – One-Out’ system, whereby any new regulatory cost is compensated by cuts to the cost of old laws.
People can be “nudged” into giving to charity and volunteering according to the findings of “Civic Behaviour”, a research project commissioned by CLG from the universities of Manchester and Southampton. The research suggests people are more likely to get involved in voluntary activity if they get feedback on what a difference their contribution will make.
Local Government minster Eric Pickles has written to council leaders informing them that Comprehensive Area Assessments (CAAs) are to be scrapped. The work carried out by the inspectorates responsible for amassing CAA data - the Audit Commission, Care Quality Commission, Ofsted, and Her Majesty’s Inspectorates of Constabulary, Prisons and Probation – has been accused of creating more bureaucracy for local authorities. There has been little indication so far as to what will happen to the extensive data collected.
Regional Development Agencies have been informed of how £270m in cuts will be delivered this year. In numerical terms, the largest cuts will fall on the North West Development Agency (£52m) and Yorkshire Forward (£40.3m). However, in proportion to budgets, the largest cuts will fall on Development Agencies in the East of England (£23.3m), the East Midlands (£28.3m), and the South East (£28.3m).
Health Minister, Andrew Lansley has outlined his priorities for healthcare in a speech to the NHS Confederation conference. The 5 priorities are - enabling patients to be participants in the design of healthcare; a focus on patients and health outcomes rather than inputs or targets; setting professionals free to use their judgement to drive up quality; prioritising public health and preventing ill-health more effectively; and reforming social care by empowering care users and integrating how services are commissioned and provided.
The Treasury has expressed doubt over the health secretary, Andrew Lansley’s planned reforms of the NHS to enable GPs to commission treatment. Officials have said there is not enough provision for making GPs accountable to the public, given they would control 80% of the £100bn NHS budget.
Care Services Minister Paul Burstow has launched a direct payments scheme for social care. Eight Primary Care Trusts will trial direct payments for personal health budgets, enabling them to give the money for someone’s care directly to them, allowing individuals to decide how they receive their healthcare in partnership with the local NHS.
The Department for Education has published a list of over 900 schools that have registered interest in becoming academies. The Department has promised to offer a contact in the Department for all such schools, who can offer information, advice and guidance.
Justice Secretary, Kenneth Clarke, has stated his intention for a “rehabilitation revolution” to reduce reoffending. The revolution will include greater use of rigorously enforced community sentences and greater involvement of independent organisations on a payment-by-results basis.
Reforms to the welfare system will see a new Work Programme provide a single package of support for the unemployed, irrespective of the barriers they face or the benefits they claim. The Government is inviting expressions of interest from the private, public and voluntary sectors to help deliver this programme. From October, Jobcentre Plus will also ask people who are receiving incapacity benefits to attend a Work Capability Assessment.
Secretary for Welfare and Pensions, Iain Duncan Smith has suggested that council houses in certain areas are “under-occupied” and that the unemployed could use their house as an asset with which to move.” Under the Government’s plans, people in areas of high unemployment would be guaranteed a place at the top of housing waiting lists if they relocated to more prosperous areas to find a job.
International Development Secretary Andrew Mitchell announced cash-saving measures as part of a drive to increase value-for-money in the Government’s aid budget. The savings include scrapping the £6.5m Global Development Engagement Fund, a scheme aimed at community groups for projects on ‘development awareness-raising’ in the UK.
The Department for Environment, Food and Rural Affairs has announced that the Commission for Rural Communities will be abolished. A strengthened Rural Communities Policy Unit will operate within Defra to champion rural needs and issues across government departments and work with the civic sector to promote rural solutions at the local level.
Opposition
Harriet Harman MP, Acting Leader of the Labour Party, has criticised the Budget as one that will lead to job losses, prevent economic growth and harm public services. Harman also took aim at the Lib Dems over inconsistent support for cuts and VAT rises.
Skills
The UK Commission for Employment and Skills (UKCES) has produced its business plan for 2011/12. The plan states the intention to streamline the network of Sector Skills Councils to respond to the most pressing skills needs facing the UK economy. Proposals for a substantial reduction in the number of SSCs will be brought forward in October 2010 following discussions with the Sector Skills Councils, government sponsors and key stakeholders.
UKCES has published a report which looks into employment and skills outcomes for the socially excluded. The report found that current targets and funding methods are limited in their attempts to mitigate the risks of creaming off the best talent and parking the least able learners. In particular, funding methods neither recognise the full extra costs of delivering these services nor the potential benefits in terms of savings in other service areas.
Over 4 million vocational qualifications (VQs) were awarded last year according to new figures released to mark VQ Day, the annual nationwide celebration of vocational qualifications. The overall number of VQs achieved has risen over 11% from last year, according to the VQ Day review of vocational qualifications.
Think tank and research activities
The Institute for Fiscal Studies has challenged George Osborne’s contention that the Budget was “tough, but fair”. The IFS argue that the Budget looks “somewhat regressive” when you take out the effect of measures that were inherited from the previous Government and look further into the future than 2012–13. Meanwhile, the plans to reduce welfare spending were described as “a mixed bag of reforms with no consistent objective beyond the desire to save money.”
A report by the National Endowment for Science, Technology and the Arts (NESTA) has collected examples from many different international contexts to suggest that better service outcomes can be delivered alongside efficiencies. The report argues that achieving long term service transformation can only be done by generating new insights, finding new suppliers, untapping new resources and re-evaluating the customer base. To deliver radical efficiencies, national government needs to provide central strategic direction, whilst the organisations closest to the citizen design, develop and deliver new services.
The Institute for Public Policy Research has published research exploring the future role of social enterprises in public service delivery. The report argues that, although the voluntary sector has numerous reasons to be cheerful, potential challenges include the uncertainty around grants, service agreements and contracts due to end in March 2011, as well as fears that the drive for public sector efficiency will result in ever larger contracts which put commissioning beyond the reach of many social enterprises.
DEMOS has published a report outlining how measures of value, which take into account wider ‘value added’ impacts and softer outcomes, are increasingly replacing narrow financial returns for funders and commissioners of public services . The report reveals a gap between the aspirations of policy makers for quantifiable measures of social value, and the ability of third sector organisations to measure social outcomes.
The voluntary sector
The Charity Tax Group estimates that the rise in VAT will cost charities an extra £140million annually. The Charity Tax Group has asked the government to exempt charities from the increase in VAT, and will continue to lobby for that exemption until the tax comes into force on 4 January 2010.
The homelessness charity Shelter has warned that the plans to cap housing payments at £280 a week for a one-bedroom property and £400 a week for a four-bedroom family home could make many properties unaffordable, especially for people in areas such as inner London. The new measures will also lead to overcrowded homes and more homelessness.
Charities working with the disabled have expressed concern about new measures surrounding the Disability Living Allowance. Richard Hawkes, the chief executive of Scope, said: “The proposal to introduce a new medical assessment for DLA appears designed purely to reduce the number of people eligible for this support. DLA is not a benefit, but a basic recognition that it is more expensive to live as a disabled person in our society.”
The Third Sector Research Centre has produced research suggesting that large charities are not taking an increasing proportion of the sector’s income. A paper published by the TSRC also provides evidence that the largest 1% of charities accounted for 62.1% of the sector’s income in 2007, exactly the same proportion as in 1995.
The Charity Commission has updated its guidance on fundraising. The updated Charities and Fundraising includes more detail on risk management of fundraising and advice for trustees on what to consider when choosing fundraising methods. The guidance also provides advice on common fundraising issues that charity trustees may face.
ACEVO have launched a new website, “Cutswatch” to provide useful information and resources for charities struggling against spending cuts. The website will also be providing practical information about mergers and collaborations.
Confidence levels regarding the finance situation of charities is at its lowest ever level according to the most recent Charity Forecast Survey. In May 2008 confidence levels regarding the financial situation of voluntary sector organisations were 21% but by May 2010 confidence levels have fallen to –30%. The survey revealed that there continues to be mixed expectations amongst charity leaders regarding expenditure with a third (33%) reporting that they expect expenditure in their organisation will decrease and just over a third (38%) reporting it will increase.
A new section on the NCVO website, “Crowdsourcing the Cuts”, asks charities to reveal how their statutory funding has been cut and what effects it will have on their long-term future and their service users. NCVO estimate that nearly £3m of cuts have already been announced.