Spring Statement 2019DeHavilland Briefing

DeHavilland Content & Service TeamsMarch 2019

Contents

Introduction 1

Business & Employment 3

Culture, Media & Telecoms 6

Education, Science & Skills 8

Energy & Environment 11

Financial Services, Insurance & Pensions 14

Health, Social Care, Welfare & Life Sciences 16

Transport & Infrastructure 19

Housing 22

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DeHavilland Spring Statement 2019

Introduction

The Chancellor had played down expectations in the run up to the 2019 Spring Statement, seeking to avoid any headlines. In fact, looking across the newspaper front pages today, one could be forgiven for thinking there was no major statement happening at all.

As anticipated, Mr Hammond’s speech followed the traditional format of outlining the forecasts of the Office for Budget Responsibility (OBR) and then covering a series of announcements as a ‘mini-budget’. However, the event was unable to avoid touching heavily on the UK’s withdrawal from the EU in a week clearly dominated by the issue.

Later in his remarks, Mr Hammond built on his theme of the nation’s productivity from the Spring Statement in 2018. He argued that his policies of embracing technology and investing in infrastructure would help to boost both productivity and wages.

Throughout the Spring Statement the Chancellor touched on a number of studies and consultations, and hinted at Government responses. He also announced calls for evidence and reviews in areas such as the digital economy, business, energy efficiency, and the minimum wage.

Keep reading for a sector-by-sector breakdown of analysis from DeHavilland’s Service Team.

Brexit

Casting off his customary caution, ‘Spreadsheet Phil’ used the spotlight of the Spring Statement to stress that the decision of MPs to reject the Withdrawal Agreement the night before had left “a cloud of uncertainty hanging over our economy”. He also warned that a disorderly Brexit would result in a ““a significant short to medium-term reduction in the productive capacity of the British economy”, with lower growth, higher unemployment, and rising prices.

Conversely, the Chancellor vowed to loosen the Treasury’s purse strings to deliver tax cuts and spending on public services if Parliament decided to back the Prime Minister’s deal and help the Government secure a smooth Brexit. This “deal dividend” would total £26.6m.

Later in the Statement it was revealed that a full, three-year spending review would be launched alongside the Autumn Budget. The catch again, however, was that this could be cancelled if a deal could not be passed.

Some MPs will see all this as an over-politicisation of the Spring Statement, but Theresa May is unlikely to care if it helped to focus the minds of those sat on the green benches before crucial votes tonight and tomorrow on leaving the EU without a deal and extending the Article 50 negotiating period respectively.

Introduction

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OBR forecasts

Mr Hammond argued that the economy had “defied expectations”. The figures from the OBR paint a mixed picture.

Growth is still, broadly, predicted to be the same over the next five years as was expected back at the Autumn Budget. More concerningly, however, is the fact that growth for 2019 has been revised down from 1.6% to just 1.2% by the OBR.

Borrowing over the same period has also been revised down, with the Chancellor keen to boast that borrowing this year was now set to be £3bn lower than the £25.5bn previously estimated by the OBR in October.

The national debt has seen similar downward revisions. Whilst these numbers may be small in percentage terms, the Government welcomed the opportunity to repeat its mantra that the Conservatives are the party that can best be trusted to manage the country’s finances with turbulent times ahead.

With 3.5m more people in work now than in 2010, unemployment is just 4%, its lowest rate since 1975. The OBR predict that a further 600,000 people will enter the UK workforce by 2023.

Reaction

Shadow Chancellor John McDonnell was predictably unimpressed with the Statement, accusing the Government of showing a “toxic mix” of complacency and incompetence in its handling of Brexit.

He went on to use the bulk of his response to attack the Conservative Party along familiar lines, bemoaning cuts to public service budgets such as education and the police. He also accusing the Government of achieving its employment statistics by pushing people in to insecure and low-paid work.

SNP Westminster Economy Spokesperson Kirsty Blackman stated that there was “no certainty about the future health of the economy” because there was still no clarity on the relationship that the UK would have with the EU.

Chair of the Treasury Select Committee and Conservative MP Nicky Morgan questioned the accuracy of OBR forecasts at this juncture, and asked for the Office to revise its numbers once Brexit had developed further in the coming weeks and months.

Business, Energy and Industrial Strategy Committee Chair and Labour MP Rachel Reeves expressed particular concern about the predicted fall in investment in to the UK. She urged the Government to boost spending in infrastructure to help the economy grow.

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Business & Employment

Summary

Employment and pay

• The Chancellor announced that a consultation would be opened into low pay, to specifically look at the effect of minimum wage rates on the wider economy.

• The review of this will be undertaken by the Low Pay Commission later in 2019. This will form part of the extension of the Low Pay Commission’s remit.

• A review into the impacts of the minimum wage has been announced, please see the terms of reference here.

Immigration

• The Chancellor announced that paper landing cards would be abolished. He also confirmed the extension of e-gates to a number of countries, as was recently passed through the House.

• The Chancellor added that PhD immigration will be eliminated completely from visa caps, with the aim of boosting research and innovation.

Tax

• In the written statement, the Chancellor announced a consultation into R&D tax avoidance, specifically focusing on tax relief abuse by SMEs.

• He reaffirmed his commitment to the new Digital Services Tax. A consultation on the detailed design and implementation of the Digital Services Tax that will take effect from 1 April 2020.

• The written statement also set out measures to prevent the Isle of Man being used as a tax heaven. This includes a review into VAT administration for personal vehicle imports.

• It further announced calls for evidence on simplifying the VAT Partial Exemption regime and the Capital Goods Scheme, and Social Investment Tax Relief.

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DeHavilland Spring Statement 2019

• It also indicated that draft guidelines and new legislation on the Enterprise Investment Scheme (EIS) would be approved.

Consumer rights

• As part of tackling large technology companies, following a review into “unlocking digital competition”, the Chancellor indicated that he would support new powers for consumers.

• Productivity• The Chancellor announced that Budget 2018 commitments on apprenticeships would be brought

forward to April 2019, including the co-investment rate being halved from 10% to 5% and the amount employers can transfer to their supply chains increasing to 25%.

• He stated that had been engaging with businesses, and would chair a roundtable next month. • The CMA will carry out a review to assess how regulation affects competition in the UK business

environment, in the event of a Brexit deal. • The Chancellor also announced that, in an attempt to tackle late payments, company audit

committees would be required to review payment practices and report on them in company accounts.

Productivity

• The Chancellor announced that Budget 2018 commitments on apprenticeships would be brought forward to April 2019, including the co-investment rate being halved from 10% to 5% and the amount employers can transfer to their supply chains increasing to 25%.

• He stated that had been engaging with businesses, and would chair a roundtable next month. • The CMA will carry out a review to assess how regulation affects competition in the UK business

environment, in the event of a Brexit deal. • The Chancellor also announced that, in an attempt to tackle late payments, company audit

committees would be required to review payment practices and report on them in company accounts.

Opposition response

The Shadow Chancellor John McDonnell criticised the Government for having “broken the historic link” between getting a job and subsequently being lifting out of poverty. He described it as “remarkable” that the Government had created a low-pay long-hours job market.

Business, Energy and Industrial Strategy Committee Chair and Labour MP Rachel Reeves noted that GDP growth had been revised down, as had the predictions for business investment. She cited concerns from the FSB and CBI and called on the Government to invest in the country so that the economy would grow faster again.

Stakeholder reaction

Rain Newton-Smith, Chief Economist from the Confederation of British Industry (CBI) said: “Prompt payment practices are good for businesses throughout the supply chain, so if reporting encourages better behaviour from firms that should be welcomed”.

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He went on to suggest the UK should get behind the OECD efforts to tax online sales and warned about “going it alone”.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC) referred to their recent analysis on the Making Tax Digital initiative and said: “While steps have been taken to have a light touch approach to penalties in the first year of implementation, businesses will want to know how this will work in practice and seek reassurances that HMRC’s already stretched resources will be able to cope with supporting businesses through such a fundamental change to the tax system”.

Mike Cherry from the Federation of Small Business welcomed the Government’s moves to act on late payments.

Analysis

Following the Government’s priorities of tackling the ‘productivity puzzle’ the Chancellor continued to put forward policy proposals to tackle this. These were evident across a number of sectors, with a specific focus on harnessing technology through research and innovation.

Notably, except for measures to help deal with late payments, there was no specific focus on supporting manufactures. However, the CMA will conduct a review in to how regulation affects competition in the UK. These conclusions could form the basis of government regulatory policy in the foreseeable future.

Amid recent moves from the EU to not go ahead with its own tax for online sales in favour of supporting the OECD, the Chancellor reaffirmed his aim of developing a Digital Online Sales Tax. This has been praised by retailers as a way to rebalance the playing field and would go hand-in-hand with the Treasury Committee’s review of Business Rates.

Although focusing on digital and technology, the CMA’s look at providing more power for consumers should be kept in mine by all, as any changes to these powers could crossover to other sectors.

As the Immigration White Paper is still under consultation, the Chancellor only touched on this issue. He did, however, announce the expansion of e-gates and the removal of paper landing card. Like many issues for business, this is in a state of inertia until more is known about the future UK-EU relationship.

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Culture, Media & Telecoms

Summary

The Digital Environment and Competitiveness • The Digital Economy represented great challenges, Chancellor Philip Hammond said, and he

stated that the regulatory environment needed to be updated so that competition in the digital market place was adequate. The Chancellor added he had written a letter to the Chair of the CMA, the Rt Hon Lord Tyrie, asking “whether the CMA Board would prioritise a decision on whether to take forward a market study into digital advertising market, as soon as you consider it possible to do so, and come forward with recommendations”.

• He also welcomed an independent report on the state of competition in digital markets, which was published earlier today. The report made several key policy recommendations, including strong pro-competition policies, which “counter the forces that can lead to high concentration and a single winner.” (p.5)

• As part of the above announcements, the CMA have announced today that, subject to an orderly exit from the European Union and therefore resources, they will carry out a review to assess how regulation affects competition in the UK business environment.

• Another announcement was the consultation on the detailed design and implementation of the Digital Services Tax that will take effect from 1 April 2020.

Connectivity

• On full-fibre network connectivity, the Spring Statement mentions the allocation of £53m towards nine local areas, who have successfully bid since the Budget, from the third wave of the Local Full Fibre Networks challenge fund.

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Science and Technology

• The Chancellor also announced the allocation over £200m in cutting-edge infrastructure to support UK scientists, innovators and industry. These investments, Hammond said, underpinned the Government’s ambition to raise economy-wide investment in R&D to 2.4% of GDP by 2027 and drive progress against the Grand Challenges, such as healthy ageing and the AI and data revolution.

• On supercomputers, the Chancellor announced funding for ARCHER2, allocating £79m to a new UK supercomputer which will replace the current national high-performance computing platform (ARCHER), providing researchers with a fivefold increase in computing capacity.

• Scientists and researchers – from Autumn 2019, PhD-level occupations will be exempt from the Tier 2 (General) cap, and at the same time the Government will update the immigration rules on 180-day absences so that researchers conducting fieldwork overseas are not penalised if they apply to settle in the UK.

• On Joint European Torus (JET) Funding (Fusion), £60m has been set aside to confirm funding is guaranteed for the facility over 2019/20.

• On Genomic Research, the Chancellor also added that he was allocating £45m to the European Bioinformatics Institute, ensuring the UK’s continued lead in genomics research.

Stakeholder reaction

The CBI has responded to the Spring Statement presented by Chancellor Philip Hammond. Rain Newton-Smith, CBI Chief Economist said, “…going it alone on a digital services tax is high risk, especially at a time when the UK already looks increasingly isolated. The EU has dropped their plans and got behind the OECD’s efforts - the UK should follow suit. The government needs to be doing all it can to encourage investment in the UK and adoption of new technologies, not putting up barriers.”

Conservative DCMS Committee Chair Damian Collins, the Chair of the DCMS Select Committee said, ”Very pleased that Philip Hammond has joined with the DCMS Committee in calling for the CMA to conduct a review into the digital advertising market. He is right that we must update our regulations and rules to protect consumers in the digital sphere.”

Analysis

The Chancellor has today announced a review of updating UK competition regulation for the digital age. He pledged that the UK would lead the world in delivering a digital economy that “worked for everyone” and protected consumers from online harms. This has reiterated the Government’s intention to act unilaterally if needed, after it was reported earlier today that the European Union has decided to scrap its digital tax plans, following opposition from member states.

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Education, Science & Skills

Summary

Apprenticeship Levy

• The Budget in 2018 had previously announced that co-investment rate will be halved from 10% to 5%, and the amount that employers can transfer to their supply chains would increase to 25%. The Chancellor noted in his speech that this would not take effect from April.

• He noted further that he expects the Augar Review into Post–18 education to publish shortly, and for the Government to respond to this later in the year.

Sanitary products

• In a bid to try and tackle period poverty, the Chancellor announced that from the next school year there will be the provision of free sanitary products in secondary schools and colleges.

Science • The Chancellor announced the allocation over £200m to support scientists, innovators and

industry, something he suggested would underpin the Government’s ambition to raise economy-wide investment into R&D to 2.4% of GDP

• £81m is to go towards a national Extreme Photonics Application Centre in Oxfordshire and £45m towards a critical upgrade to data storage cloud computing infrastructure at the European Bioinformatics Institute in Cambridgeshire.

• This further included £79m towards a new UK supercomputer and £60m to confirm funding for the Joint European Torus Funding facility over 2019/20.

PHD exemption

• The Chancellor announced that from autumn the Government will completely exempt PHD-level roles from visa caps.

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Opposition response

Shadow Chancellor John McDonnell, in response said: “that the chancellor has some cheek to speak about technical and vocational skills. Almost a quarter of all funding to further and adult education has been cut since 2010. The number of peoples starting apprenticeships has fallen by 26%.”

The Liberal Democrats tweeted, “Liberal Democrats have led the fight for free sanitary products in schools - today Philip Hammond has announced new funding for this purpose. With 1 in 4 women saying they have experienced forms of period poverty, we must continue to demand better.

Stakeholder reaction

Research and Development

The Russell Group said that they were “happy to see the £200m confirmed for R&D and we hope to see real commitment behind these words in the CSR.”

Period Poverty

The National Association of Schoolmasters/Union of Women Teachers said that they “welcome(d) the Chancellor’s commitment to fund access to free sanitary products for pupils in secondary schools from next year. However, it is vital that this scheme is extended to cover all primary schools and colleges to ensure that no girl misses out on her education or has her dignity compromised due to period poverty.”

Apprenticeship Levy

Jane Gratton, Head of Skills at the British Chamber of Commerce said, “We have spent months pushing ministers to make practical changes to the way the apprenticeship system works, and this is an important step in the right direction. Reducing the co-investment costs for employers will encourage more firms to take on new talent, and train and upskill their wider workforce.”

Analysis

There was a fair amount of content in relation to education and skills from the Chancellor in the Spring Statement. One of the main announcements came in relation to the apprenticeship levy where changes made in the budget have now been brought forward to April, this is likely to be welcomed by employers.

Another key announcement from the Spring Statement is the allocation of over £200m to help support different science and technology projects. There could well be concerns around this due to the still uncertain nature of our future relationship with the European Union and how this might affect research funding.

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The announcement around provision of sanitary products in schools and colleges seems to have been broadly welcomed, but there still could be concern over the extent of the provision and the effects of poverty overall.

With the announcement of a spending review before the summer recess if there is a deal, there will much interest in what the future might hold for schools funding.

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Energy & Environment

Summary

Green Gas

• The Chancellor said that the Government was committed to being the first Government to leave the environment in a better state than they found it.

• He pledged to accelerate the decarbonisation of the UK’s gas supplies, through increasing the proportion of green gas in system. The Chancellor said that the UK would need to reduce its dependence on burning natural gas to meet its climate change targets and would be launching a consultation on how to deliver this pledge later in the year.

Biodiversity

• The Chancellor also made several commitments on Biodiversity. He pledged that the Government’s Environment Bill would mandate that all new-build properties would require a net biodiversity gain.

• He also said that the Government would be commissioning a review, led by Professor Sir Partha Dasgupta, to assess the economic value of biodiversity and to identify what can be done to enhance biodiversity whilst delivering economic growth.

• The Chancellor said that the Government would be launching a call for evidence on safeguarding biodiversity in the Overseas Territories, including an announcement that a further 445,000 sq. kilometres of ocean around Ascension Island would be categorised as a marine protected area.

Nuclear Power

• In the Chancellor’s Statement, he confirmed up to £60m of funding for the European JET Fusion nuclear programme over 2019/20, regardless of the outcome of the Brexit negotiations.

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Offshore Oil and Gas Industry

• The Government also published a call for evidence on the UK’s offshore oil and gas decommissioning industry.

• The consultation looks at how the UK decommissioning industry can further support MER UK and reduce the costs of decommissioning offshore oil and gas rigs in the UK. The consultation will also investigate what can be done to encourage the export of decommissioning expertise abroad.

• The call for evidence closes on 8 May 2019.

Energy Efficiency in Homes

• The Chancellor also announced several measures to improve energy efficiency in homes.

Opposition response

Shadow Chancellor John McDonnell responded very critically to the Chancellor’s Statement, saying that “the review of biodiversity might – hopefully – show that the Budget of Natural England, the body responsible for biodiversity in England has more than halved over a decade.

“A review of carbon offsets might reveal that they do not reduce emissions. And offsetting schemes like the Clean Development Mechanism have been beset by gaming and fraud.

“This from a Government that removed the Climate Change Levy exemption for renewables, that scrapped feed-in tariffs for new small-scale renewable generation, and that cancelled the Zero Carbon Homes policy.”

Shadow BEIS Secretary Rebecca Long-Bailey tweeted that the “Chancellor’s solution to climate change is offsetting. As well as being morally dubious, offsetting has a terrible record. Best case - it is like shifting food around your plate, with no impact.”

Stakeholder reaction

Friends of the Earth responded to the Statement saying that “instead of putting climate change at the heart of economic policy-making, the Chancellor is merely fiddling in the margins while the planet burns.

“The Chancellor should have announced a massive programme of investment in home insulation and public transport, instead of pushing the false solution of carbon off-setting for aviation.”

Greenpeace responded cautiously to the Statement, saying that “The Chancellor’s rhetoric may have been strong on the environment, but the reality was a very mixed bag. Philip Hammond can’t hide the fact that the Treasury is still failing to truly get to grips with the greatest challenges of our time.

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“The biodiversity assessment could, depending on scope, be a really significant moment in our global nature crisis. The announcement of Partha Dasgupta as external chair is good news. The intention to support a marine protected area covering all of Ascension Island’s waters is an important step. And the plan to end fossil fuels in new homes is vital.

The think tank Bright Blue welcome the Statement, saying that it was a “Bright Blue policy win in the 2019… a low-carbon obligation for the UK’s gas network.”

The energy trade association Energy UK has responded, saying that it was “positive to hear from the Chancellor today, in his Spring Statement, of measures to increase green gas and the new Future Homes Standard to deliver low carbon heating and greater levels of energy efficiency in all new homes from 2025. We also welcome the publication of the Call for Evidence on the Business Energy Efficiency Scheme to help small businesses save money on their energy bills and cut carbon emissions.”

Analysis

The Chancellor committed to a large package of measures on biodiversity and environmental protection, coming off the back of many consultations by DEFRA. In the last few weeks, DEFRA, and Environment Secretary Michael Gove in particular, have been criticised for the large number of consultations that have been launched, with very few actual policies being initiated at the end of the consultations.

The pledge to increase the proportion of green gas came off the back of a publication by the Conservative-affiliated think tank Bright Blue, which published a study calling for similar measures. The Chancellors announcement on green gas could also be important to a variety of other sectors, outside of domestic heating. Green gas, such as hydrogen, has been floated as an alternative to electrification of the transport industry, particularly cars and trains.

The Government’s consultation on the oil and gas decommissioning industry has come off the back of a very critical report by the NAO on the costs of the industry, and the revelations that the German and UK governments had clashed over North Sea oil decommissioning. The Government is looking to reduce the costs of decommissioning and to export expertise abroad, which will help both reduce the costs to tax payers and help further the ‘Global Britain’ agenda.

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Financial Services, Insurance & Pensions

Summary

Economic outlook

• The Office for Budget Responsibility (OBR) forecasted GDP growth to be 1.2% in 2019. • The growth forecast for 2020 was 1.4%, increasing to 1.6% for the years 2021, 2022 and 2023. • Borrowing would fall to 1.1% in 2018/19, the OBR predicted. However, borrowing was expected

to increase in 2019/20 to 1.3% and then begin to fall over the next 4 years. • Government debt predictions had also been revised down, falling to 82.2% for 2019/19. This

falling trend will continue, with debt predicted to be at 73% in 2023/24. • Mr Hammond also committed to a full spending review which be launched prior to summer

recess, but only in the event that the UK secures a Brexit deal.

Financial services regulation

• The Government has confirmed that it will be setting out its approach to consulting on the necessary changes to the Financial Services Regulatory Framework arising from Brexit.

• The Government reaffirmed its commitment to provide additional funding to the British Business Bank for venture and growth capital, once the UK leaves the EU.

Tax avoidance, evasion & non-compliance

• The Government has published a policy paper entitled ‘Tackling tax avoidance, evasion and other forms of non-compliance’ which outlines its achievements over the last year.

• A further policy paper entitled ‘Offshore tax compliance strategy: No Safe Havens 2019’ has been published, outlining the Government’s strategy for offshore tax compliance.

• The Government has put out a call for evidence on how improvements to the Insurance Premium Tax can be made.

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Opposition response

Shadow Chancellor John McDonnell said “The Chancellor has boasted about the OBR forecast of 1.2% growth this year. What he hasn’t mentioned is that the forecast has been downgraded from 1.6% – downgrading forecasts is a pattern under this Chancellor. In November 2016 forecasts for the following year were downgraded from 2.2% to 1.4%. In autumn 2017 forecasts for the following year were downgraded from 1.6% to 1.4%. Economists are warning that what growth there is the economy is largely being sustained by consumption based upon high levels of household debt.”

Shadow Economic Secretary to Treasury Jonathan Reynolds tweeted that the UK economy “was in trouble regardless of Brexit” in reaction to the Chancellor’s Spring Statement.

Stakeholder reaction

John Hawksworth, Chief Economist at PwC said “The OBR’s relatively rosy fiscal forecasts assumes an orderly Brexit. Provided that is achieved, the Chancellor should have some room for additional spending, or net tax cuts, at the time of his Autumn Budget and Spending Review.”

Analysis

The Chancellor attempted to be upbeat during his statement following the last night’s Brexit defeat, stating that the OBR had predicted the UK economy would continue to grow over the next five years. However, many have expressed concern over the low growth predictions, with GDP forecasts for 2019 revised down from the 1.6% autumn forecast to just 1.2%. Growth is also expected to remain muted for the coming years, with forecasts of 1.4% in 2020 and 1.6% in 2021, 2022 and 2023.

The Chancellor’s announcement on growth seemed to have come as no surprise to markets, which showed little movement after his speech. It is expected that the low growth forecasts and Brexit uncertainty will result in the Bank of England becoming unwilling to raise interest rates in the near future.

The Chancellor stuck to his guns when he said the Spring Statement would not be a fiscal event, instead using the occasion to announce that the Treasury would launch the previously promised full spending review before summer recess. However, Mr Hammond said this would only take place if the UK was able to secure a Brexit deal with the EU.

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Health, Social Care, Welfare & Life Sciences

Summary

NHS funding

• The Chancellor touched on the fact that that the Government was putting the NHS first in line with the Prime Minister’s earlier announcement of £34bn additional funding per annum by the end of the period. He emphasised that this was the Government’s largest cash commitment to the support the NHS Long Term Plan - delivering improved cancer and mental health care, a transformation of GP services, more doctors, more nurses and better outcomes for patients.

• Mr Hammond said that “assuming a Brexit deal is agreed over the next few weeks and the uncertainty over our economy is lifted” the Government intended to launch a full three-year spending review before the summer recess to be concluded alongside the Autumn Budget. He stated that this will set departmental budgets beyond the NHS to reflect the public’s priorities between areas like social care, local government schools, police, defence and the environment.

Life science research

• As part of the larger announcement that the Government has made a commitment of £200 million to research and development, in order to maintain the UK’s technology edge, the Chancellor said that he was allocating £45 million to The European Bioinformatics Institute to ensure Britain’s continued lead in genomics research.

• Also of interest to researchers in the field of health was the decision to remove PhD students from the cap on Tier-2 visas.

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Opposition response Shadow Chancellor John McDonnell has criticised the Conservative Government’s “brutal complacency over austerity”, saying that they have shifted the country’s debt on to the “backs of many of the poorest in our society”. He said that the benefits freeze as well as the roll out of Universal Credit was forcing people to foodbanks in order to survive. Mr McDonnell highlighted that 4.5m children were living in poverty, and 1m pensioners were living in severe poverty, and cited the UN’s findings that UK austerity was inflicting destitution on its own citizens. He also highlighted the plight of those who died whilst waiting for a decision on Personal Independence Payments and those who had lost their home due to cuts on housing benefits. McDonnell concluded by saying that “austerity was never a necessity, it was always a political choice” and the Conservative Government had demonstrated “a chilling ability” to disregard the suffering they have caused.

Liberal Democrat Leader Sir Vince Cable said that the Spring Statement was a “non-event”, adding that there needed to include tax increases to pay for the NHS, social care, police, and schools.

Stakeholder reaction The Trussell Trust expressed their disappointed by today’s Spring Statement, which they believed failed to end austerity as promised. With the benefits freeze and a five week wait for Universal Credit, thousands more people will become “trapped in poverty”. Chief Executive Emma Revie said that “the Government needs to put money back into the pockets of people who have lost the most to austerity”.

HfT have said that it is “hugely disappointing” that social care was not granted any additional funding by the Chancellor. The charity had previously called for an emergency cash injection to help address the ongoing recruitment crisis in the sector, but said that it was clear “the Government can no longer provide short-term solutions to long-term problems”. It added that the planned green paper on the future of social care funding was 700 days overdue, and it was “vital” that the government brought forward sustainable funding solutions as “a matter of urgency”. Child Poverty Action Group has responded to the Spring Statement saying it was dismayed that it had not brought an end to the freeze on working age benefits, despite cross-party calls for the policy to stop. Alison Garnham, Chief Executive, said that there was “no ongoing justification for these ‘stealth cuts’” and it “leaves in tatters the Prime Minister’s claim that austerity is over”.

The Joseph Rowntree Foundation has criticised the Chancellor’s Spring Statement for failing to take action to end the benefits freeze. Chief Executive Campbell Robb said that in-work poverty is rising faster than employment, yet the Government has “opted not to help the 3.2 million children in low income working families who would benefit from an early end to the freeze”.

Caroline Abrahams, Charity Director at Age UK in response to the Chancellor’s Statement today said that it was an “endless prevarication over social care”. Whilst acknowledging that the Statement contained “great matters of State” with respects to the future of the country she said that “with each delay it is becoming harder to avoid the conclusion that the political commitment to reform and sustain social care is just not there at the moment, leaving many older and disabled people, and their families and carers, to pay an extremely heavy price”.

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Andrew Harrop, General Secretary of the Fabian Society, has said that next month the government will cut taxes for the rich and freeze social payments for the poor. He added that it is time to “bring country together by increasing spending on benefits for families and safeguarding public services”.

Aegon UK has said that “social care funding received a mention in the Spring Statement but only to say it will be considered as part of a summer spending review”, and emphasised the urgency of this discussion in light of the upcoming Social Care Green Paper.

Independent MP Heidi Allen has said that the “Government does not understand how hard life is for vulnerable claimants living on benefits which have not kept up with inflation”.

Analysis In light of the Chancellor’s light touch on social care and the Prime Minister’s largest cash injection into NHS funding which was announced last year, this year’s Spring Statement has been somewhat disappointing for the social care and welfare sectors. With questions around the financial sustainability of the NHS Long Term Plan’s promises, and the future Adult Social Care Green Paper looming, this Statement did not appear to address any of the concerns that have been raised over recent months.

What we can infer from the Chancellor’s Statement, and it’s very swift mention of social care and the NHS, is that the announcements for the sector are more likely to be revealed in the Spending Review before summer recess. With the UK’s economic position up in the air following another rejection of Theresa May’s deal yesterday, and with a no-deal Brexit becoming increasingly pressing, it would appear that waiting for the Spending Review in a few months time would be a more effective time to announce an honest and sustainable plan for funding for the social care and welfare sector.

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Transport & Infrastructure

Summary

Transport Projects

• While the Chancellor did not make any announcements to large transport projects, he did reaffirm the Government’s commitment to delivering Northern Powerhouse rail.

Infrastructure

• The Chancellor stated that the Government would publish the updated National Infrastructure Strategy alongside the 3-year Spending Review.

• Also announced £260m of funding for the Borderlands Growth Deal, which he stated would combine with the £102m announced recently for the Carlisle Southern Link Road from the Housing Infrastructure Fund, meaning up to £362m of UK government investment into the Borderlands area.

• The Government announced the launch of a consultation on the future of infrastructure finance. The consultation will close on 5 June 2019.

Transforming Cities Fund

• In the Autumn Budget 2017, the Chancellor announced the £1.7bn Transforming Cites Fund to improve transport in English cites. Half of this funding was allocated to Combined Authorities with mayors.

• This year, the Chancellor announced £60m of investment in ten cities across England, to come from the fund announced at Budget 2017 and be put towards bus station upgrades, new cycle lanes and road improvements, supporting the wider programmes being delivered by city regions as part of the Industrial Strategy.

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Housing Infrastructure Fund

• Chancellor Hammond announced £717m from the Housing Infrastructure Fund to unlock up to 37,000 new homes on sites in West London, Cheshire, Didcot, and Cambridge.

• Accompanying this, the Ministry for Housing, Communities and Local Government published a report on the Oxford-Cambridge Arc to outline the Government’s holistic approach to development within said Arc.

Aviation

• The Chancellor announced that from June, the UK will begin to abolish the need for UK landing cards at points of entry.

• The Chancellor stated that citizens from countries including the US, Australia and South Korea would in future be permitted to use e-gates at UK airports in much the same manner as citizens from EEA states. He stated the Government’s ambition to “go further” in future.

Green Transport

• Hammond announced that the Government would launch a call for evidence over whether passenger carriers should be obliged to offer carbon offsets, and a call for evidence on the CRC energy scheme.

Opposition response

Responding, Shadow Chancellor John McDonnell stated that plans for future transport infrastructure spending would result in London receiving £4155 per person, in contrast to £1600 per person in the North of England. McDonnell sought to debunk the claim that the Government was spending on infrastructure by insisting the country came near the bottom of rankings compiled by both the OECD and the TUC. He criticised the Government’s claim of record investment in the railways by underlining the chaos caused by recent timetabling changes implemented under the Transport Secretary.

Green Party Leader Caroline Lucas criticised the plan for travel providers to offer carbon offsets, calling instead for a “frequent flyer levy & investment in clean transport”.

Stakeholder reaction

Darren Caplan, Chief Executive of the Railway Industry Association (RIA), said: “With the Chancellor announcing investment decisions in his Spring Statement today, and with the next rail investment Control Period, CP6, starting just next month, the Railway Industry Association and its members are concerned that the Government’s new Rail Network Enhancements Pipeline (RNEP) process will reduce the rail industry’s ability to plan for and deliver enhancement projects.

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“We urge the Government to publish as soon as possible a full list of enhancements projects planned for CP6, as well as those projects planned as part of the Hendy Tail which have been carried over from CP5. And we call for the full transparency going forward for this new Pipeline.”

Mel Evans, Senior Campaigner at Greenpeace UK said: “The Chancellor’s rhetoric may have been strong on the environment, but the reality was a very mixed bag. Issues like the shoddy state of our existing housing stock and rapid adoption of electric vehicles require serious money behind serious policies. A good start would be banning the sale of new petrol and diesel cars and vans by 2030. Equally, when compared to ideas like frequent fliers paying more and more heavily for trips abroad, carbon offsetting transport falls very short.”

Analysis

The Spring Statement contained relatively little for the transport and infrastructure sectors, with the Financial Times having pre-empted the major announcement of a consultation as part of the Government’s review of infrastructure finance. This consultation will examine the strengths and weaknesses of the infrastructure finance market and will provide valuable insight into the Government’s tools as it seeks to replace the PFI financing model. The further expansion of the Housing Infrastructure Fund comes hot on the heels of a call by the Mayor of London, who had issued a press release calling for “urgent action on affordable housing”.

Investment from the Transforming Cities fund will likely be welcomed by industry but will be cold comfort to those hoping for further announcements on large infrastructure projects in the vein of HS2 or Crossrail. The announcement that border controls for some non-EEA nationalities will be relaxed constitutes further evidence of the Government’s pursuit of the “Global Britain” agenda.

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Housing

Summary

Affordability

• Hammond announced £3bn Affordable Homes Guarantee Scheme to support delivery of around 30,000 homes.

• The Chancellor also announced £717m from the £5.5bn Housing Infrastructure Fund to unlock up to 37,000 homes at sites including Old Oak Common in London, the Oxford-Cambridge Arc and Cheshire.

• He additionally spoke about further progress on delivering growth in the Oxford-Cambridge Arc, including £445m from the Housing Infrastructure Fund to unlock over 22,000 homes, and a joint declaration with local partners, affirming the shared vision for the Arc.

Planning

In the written ministerial statement, Hammond announced: • The Independent Report on Build Out Rates, which would introduce additional planning guidance

to support housing diversification on large sites. Sir Oliver Letwin concluded that greater differentiation in the types and tenures of housing delivered on large sites would increase build out rates.

• A Response to the consultation on planning reform which would introduce a package of reforms including allowing greater change of use between premises, and a new permitted development right to allow upwards extension of existing buildings to create new homes.

• The Accelerated Planning Green Paper, in which the Government is to publish a Green Paper setting out proposals on how greater capacity and capability, performance management and procedural improvements can accelerate the end-to-end planning process.

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Energy in Homes

• Hammond announced he would introduce a Future Homes Standard, mandating the end of fossil-fuel heating systems in all new houses from 2025 to help ensure consumer energy bills are low and homes are better for the environment.

Opposition response

Labour Party Response

Shadow Chancellor John McDonnell published his response to the Spring Statement, in which he said, “and on housing, let’s hope the Chancellor has learned the lessons of their recent initiatives, which have driven profits of companies like Persimmon to over a billion pounds, with bosses’ bonuses over a hundred million pounds.”

Shadow Housing Secretary John Healey, tweeted: “Seriously underwhelming housing announcements from the Chancellor - debt guarantees a recycled pledge from 2017, and what sounds like a partial backtrack on the Tories’ 2015 decision to scrap Labour’s zero carbon homes plan... by 2025!”

Labour MP Helen Hayes, tweeted: “Chancellor announces pitiful funding for a tiny number of ‘affordable homes’, which under his definition will not be affordable to anyone in housing need. Shocking dereliction of duty in the face of a national housing crisis”

Labour Environment twitter account responded: “The Chancellor speaks about ending fossil fuel heating systems in new homes from 2025. So, why has the Government been reducing incentives for greener energy - cutting solar panel subsidies and closing the ‘feed-in tariff’ scheme?”

Green Party Response

Green Party Leader, Caroline Lucas, criticised the announcement of energy standards for new homes and called for a “binding timetable to deliver zero carbon new builds”

Stakeholder reaction

Rain Newton-Smith, CBI Chief Economist, said that “The Chancellor’s rightly identified the need to go further and faster in combating climate change. His ambition for all new homes to be heated sustainably will ensure we make better progress towards a zero-carbon economy.

Kate Andrews, Associate Director of the IEA, commented on the £3 billion Affordable Homes Guarantee scheme, and said: “Having tried and failed in their top-down approach, the Government is still trying to address the housing crisis through central planning, which the Chancellor himself estimates will only add tens of thousands of homes to the market.”

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Paresh Raja, CEO of Market Financial Solutions, said “What the market currently needs is creative reforms to ensure more homes are added to the real estate market, be it through a reduction in stamp duty, incentives for renovating derelict homes or making it easier for buyers to access finance.”

Analysis

Hammond began his segment on housing by reiterating that the ambitious plan to restore the dream of home ownership was delivering. Before beginning any new announcements, the Chancellor acknowledged Conservative policies designed to promote home ownership and house building. He pointed out that the Government had abolished stamp duty for young people to restore the proportion of first-time buyers to above 50%. Additionally, he spoke about the Government delivering over 220,000 additional homes, planning reforms to release land in areas where the pressure is greatest and the Help to Buy equity scheme.

Hammond’s announcement regarding a Future Homes Standard came as climate change protests garnered heat. The proposals concerning eliminating fossil-fuel heating systems were recommended in a report by the Committee on Climate Change which also recommended banning gas hobs and boilers.

Housing Secretary James Brokenshire, has responded to the Letwin inquiry. You can read his response here.

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