Recommendations & Conclusions
24 items
1
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The Chancellor’s fiscal rules are reasonable in the context of the pandemic and its effects. The Chancellor has set his primary fiscal rule to target the overall stock of Public Sector Net Debt, with a secondary target to run a balanced annual current spending budget. Previous fiscal mandates had primarily …
Read more
The Chancellor’s fiscal rules are reasonable in the context of the pandemic and its effects. The Chancellor has set his primary fiscal rule to target the overall stock of Public Sector Net Debt, with a secondary target to run a balanced annual current spending budget. Previous fiscal mandates had primarily targeted the annual flow of spending and focussed on the stock of debt as a secondary target. We view both of the new targets as being of equal importance, and meeting one but not the other would not constitute success.
Show less
Government response AI summary
The government thanks the committee for their conclusions and states that the Treasury continues to monitor the risks of higher inflation and interest rates closely.
Read full response →
HM Treasury
2
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
According to the Office for Budget Responsibility, the Chancellor has between a 55 and 60 per cent chance of meeting his fiscal rules. He has given himself less room to meet his rules than his predecessors. The headroom may prove insufficient should one of the many risks to the economy …
Read more
According to the Office for Budget Responsibility, the Chancellor has between a 55 and 60 per cent chance of meeting his fiscal rules. He has given himself less room to meet his rules than his predecessors. The headroom may prove insufficient should one of the many risks to the economy crystallise.
Show less
Government response AI summary
The government acknowledges the Committee's conclusions on the government’s fiscal strategy and states the Treasury continues to monitor the risks of higher inflation and interest rates closely, and the Charter for Budget Responsibility now contains a new focus on assessing the affordability of public debt.
Read full response →
HM Treasury
3
Recommendation
Tenth Report - Autumn Budget and Spendi…
Acknowledged
By setting himself rolling targets the Chancellor has given himself the flexibility to respond to any deteriorations in the forecast at future fiscal events. However, the Chancellor should not use a rolling target as a mechanism to allow himself to present a series of future Budgets that promise fiscal sustainability …
Read more
By setting himself rolling targets the Chancellor has given himself the flexibility to respond to any deteriorations in the forecast at future fiscal events. However, the Chancellor should not use a rolling target as a mechanism to allow himself to present a series of future Budgets that promise fiscal sustainability three years into the future, but are never fiscally sustainable in the near term.
Show less
Government response AI summary
The government thanks the committee for their conclusions and states that the Treasury continues to monitor the risks of higher inflation and interest rates closely.
Read full response →
HM Treasury
4
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
It is disappointing that the Government has pushed back its target to spend £22 billion per year on Research and Development by two years from 2024–25 to 2026–
Government response AI summary
The government notes the committee's conclusions on R&D spending ambitions and highlights existing investment plans.
Read full response →
HM Treasury
27
Recommendation
Tenth Report - Autumn Budget and Spendi…
Acknowledged
However, the new commitment would still represent a significant increase and bring public UK Research and Development spending above the OECD average, and above Germany, France and the US. While the target for R&D spending remains historically high, there is a risk that at future fiscal events—as was the case …
Read more
However, the new commitment would still represent a significant increase and bring public UK Research and Development spending above the OECD average, and above Germany, France and the US. While the target for R&D spending remains historically high, there is a risk that at future fiscal events—as was the case with this Budget—the Chancellor will again opt to make savings by delaying the increases in R&D spending. Cutting or delaying R&D spending may be a false economy, given the hopes the Government has for stimulating economic growth through its R&D spending. R&D spending is important and the Government should pursue this target with considerable determination.
Show less
Government response AI summary
The government notes the committee's conclusions on R&D spending ambitions and highlights existing investment plans.
Read full response →
HM Treasury
5
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
Due to the increase in Government debt, the proportion of gilts that are index linked, as well as the proportion of UK Government debt that has been financed through the issuance of Bank of England reserves, the public finances are highly sensitive to increases in inflation and interest rates.
Read more
Due to the increase in Government debt, the proportion of gilts that are index linked, as well as the proportion of UK Government debt that has been financed through the issuance of Bank of England reserves, the public finances are highly sensitive to increases in inflation and interest rates.
Show less
Government response AI summary
The government thanks the committee for their conclusions and states that the Treasury continues to monitor the risks of higher inflation and interest rates closely.
Read full response →
HM Treasury
6
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The OBR states that its central forecast for the path of inflation could be too low. Since the Budget, inflation has already significantly exceeded the level forecast by the OBR in October. The Bank of England raised interest rates to bring the rate of inflation back towards its two per …
Read more
The OBR states that its central forecast for the path of inflation could be too low. Since the Budget, inflation has already significantly exceeded the level forecast by the OBR in October. The Bank of England raised interest rates to bring the rate of inflation back towards its two per cent target, and is likely to increase them further. It is therefore likely that by the next economic forecast, the Chancellor may be faced with significantly higher interest costs than those included within the October economic forecast.
Show less
Government response AI summary
The government thanks the committee for their conclusions and states that the Treasury continues to monitor the risks of higher inflation and interest rates closely.
Read full response →
HM Treasury
7
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The OBR forecast states that the policy mix chosen by the Chancellor at this Budget will act as a boost to inflation, and it identified in particular the increase 44 Autumn Budget and Spending Review 2021 in employer National Insurance Contributions, and the large fiscal loosening that took place in …
Read more
The OBR forecast states that the policy mix chosen by the Chancellor at this Budget will act as a boost to inflation, and it identified in particular the increase 44 Autumn Budget and Spending Review 2021 in employer National Insurance Contributions, and the large fiscal loosening that took place in the Spending Review. The Prime Minister has advocated high wage growth. As the OBR has shown, there may be some fiscal benefits from inflation if the source of inflation is higher domestic wages rather than from imported and domestic inflation in the price of goods. However, setting out an economic policy of promoting high wage growth that is not accompanied by increases in productivity will be inflationary, and risks contributing to a wage price spiral. The Chancellor showed in his speech that he is alert to the fiscal risks of higher inflation and higher interest rates becoming entrenched. The Treasury should keep these risks at the forefront of their thinking when designing policies at future fiscal events. (Paragraph 39) Spending Review and the overall tax burden
Show less
Government response AI summary
The government thanks the committee for their conclusions and states that the Treasury continues to monitor the risks of higher inflation and interest rates closely.
Read full response →
HM Treasury
8
Conclusion
Tenth Report - Autumn Budget and Spendi…
Not Addressed
While some departments which had been significantly disrupted by the pandemic, such as the Department of Health and Social Care and the Department for Transport, received large increases, the Department for Education, which was also affected by the pandemic, did not receive such a generous settlement. School funding per head …
Read more
While some departments which had been significantly disrupted by the pandemic, such as the Department of Health and Social Care and the Department for Transport, received large increases, the Department for Education, which was also affected by the pandemic, did not receive such a generous settlement. School funding per head has only now returned to 2010 levels following the latest Budget.
Show less
Government response AI summary
The government states they are exceeding commitments to replace EU funding and that spending power for the Department of Levelling Up, Housing and Communities is not falling.
Read full response →
HM Treasury
9
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
It was against the backdrop of the Covid pandemic that the Chancellor announced a large increase in departmental spending at this Spending Review, with real-terms increases for all departments. However, the Chancellor also declared his intention to cut taxes later in this Parliament. It already appears to be a significant …
Read more
It was against the backdrop of the Covid pandemic that the Chancellor announced a large increase in departmental spending at this Spending Review, with real-terms increases for all departments. However, the Chancellor also declared his intention to cut taxes later in this Parliament. It already appears to be a significant challenge for the tax burden as a percentage of GDP to be lower at the end of this Parliament than at the beginning, because the Chancellor’s tax rises have already been announced, and his fiscal headroom to reduce them and still meet his fiscal target is small.
Show less
Government response AI summary
The government thanks the committee for their conclusions and states that the Treasury continues to monitor the risks of higher inflation and interest rates closely.
Read full response →
HM Treasury
10
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
It is understandable that total departmental spending is rising at present, and that the UK’s tax burden will rise to levels not seen during peace time, given that the country is still in the midst of a global pandemic, which has at times shut down major sections of the economy …
Read more
It is understandable that total departmental spending is rising at present, and that the UK’s tax burden will rise to levels not seen during peace time, given that the country is still in the midst of a global pandemic, which has at times shut down major sections of the economy and has placed significant demand pressure on many areas of public spending. However, not all departmental spending choices that the Chancellor made were pandemic-related. If the Chancellor wishes to be able to cut taxes later in this Parliament while still meeting his fiscal rules, he may have to identify areas of departmental spending where he can reduce spending in real terms even if this is in the face of increased demand.
Show less
Government response AI summary
The Treasury continues to monitor the risks of higher inflation and interest rates closely, and the Charter for Budget Responsibility now contains a new focus on assessing the affordability of public debt.
Read full response →
HM Treasury
11
Conclusion
Tenth Report - Autumn Budget and Spendi…
Accepted
The Spending Review described how levelling up was being incorporated into many aspects of government policy. We await more specific detail on how levelling up will be measured and achieved. Rebadging existing programmes may not have the impact the Government is seeking.
Read more
The Spending Review described how levelling up was being incorporated into many aspects of government policy. We await more specific detail on how levelling up will be measured and achieved. Rebadging existing programmes may not have the impact the Government is seeking.
Show less
Government response AI summary
The government claims to be exceeding commitments to replace EU funding in full and refutes the claim that the spending power for the Department of Levelling Up, Housing and Communities is falling.
Read full response →
HM Treasury
12
Conclusion
Tenth Report - Autumn Budget and Spendi…
Accepted
The Government stated that the UK Shared Prosperity Fund will be the successor to the EU Structural Investment Funds. However, the Government is only providing to this new fund 60 per cent of the money provided by the EU fund. If the new fund is intended to be one of …
Read more
The Government stated that the UK Shared Prosperity Fund will be the successor to the EU Structural Investment Funds. However, the Government is only providing to this new fund 60 per cent of the money provided by the EU fund. If the new fund is intended to be one of “the centrepieces” of the Government’s ambition, Autumn Budget and Spending Review 2021 45 it is surprising that the size of the fund is being reduced to such an extent. The Government will need to demonstrate how these reduced funds will achieve their defined metrics for levelling up.
Show less
Government response AI summary
The government claims to be exceeding commitments to replace EU funding in full and refutes the claim that the spending power for the Department of Levelling Up, Housing and Communities is falling.
Read full response →
HM Treasury
13
Conclusion
Tenth Report - Autumn Budget and Spendi…
Accepted
Significant elements of the Government’s levelling up agenda will be delivered through the Department for Levelling Up, Housing and Communities (DLUHC). However, once the increases in social care funding are excluded, the spending power for this department’s activities are being kept flat or falling. If the levelling up agenda is …
Read more
Significant elements of the Government’s levelling up agenda will be delivered through the Department for Levelling Up, Housing and Communities (DLUHC). However, once the increases in social care funding are excluded, the spending power for this department’s activities are being kept flat or falling. If the levelling up agenda is to be carried out in a sustainable way, it may be that this will need to be reflected in the spending power of the DLUHC. This Committee awaits this Department’s forthcoming White Paper to understand how levelling up will be measured and achieved within the budgets announced. (Paragraph 79) Individual Budget measures
Show less
Government response AI summary
The government claims to be exceeding commitments to replace EU funding in full and refutes the claim that the spending power for the Department of Levelling Up, Housing and Communities is falling.
Read full response →
HM Treasury
14
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
Compared to the existing adult social care framework in England of thresholds and the absence of any lifetime spending caps, the Government’s new policy proposals are more generous. All individuals will now have a lifetime cap on contributions where previously there was none. In addition, many more individuals will now …
Read more
Compared to the existing adult social care framework in England of thresholds and the absence of any lifetime spending caps, the Government’s new policy proposals are more generous. All individuals will now have a lifetime cap on contributions where previously there was none. In addition, many more individuals will now be eligible for means tested support. These changes are welcome.
Show less
Government response AI summary
The government thanked the Committee for welcoming the social care charging reforms, noting the new £86,000 cap and that roughly two thirds will receive some state support for care costs.
Read full response →
HM Treasury
15
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
Compared to the Dilnot proposals the Government’s measures are more generous with regard to those who receive care in their own home. In addition, the cap on how much a care home can charge for weekly “living costs” has been capped in real terms at a higher amount than under …
Read more
Compared to the Dilnot proposals the Government’s measures are more generous with regard to those who receive care in their own home. In addition, the cap on how much a care home can charge for weekly “living costs” has been capped in real terms at a higher amount than under the Dilnot Review.
Show less
Government response AI summary
The government thanks the Committee for welcoming their social care charging reforms and states that the new £86,000 cap will end people’s worries that they may face unpredictable care costs.
Read full response →
HM Treasury
16
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
However, when compared to the Dilnot Review’s recommendations that had been legislated for but which have not yet been commenced, the Government’s proposals are less generous in how they treat the means tested contribution made by local authorities. As a result, while most people will pay less as a result …
Read more
However, when compared to the Dilnot Review’s recommendations that had been legislated for but which have not yet been commenced, the Government’s proposals are less generous in how they treat the means tested contribution made by local authorities. As a result, while most people will pay less as a result of the proposals overall, those who have a longer care journey and have assets of between £20,000 and £106,000 will pay far more towards their own care than they would have done under the provisions of the Care Act 2014. Even if people within this cohort do not as individuals end up needing care, they are still exposed to far greater financial risk of having to contribute £86,000 of their own money in full than would have been the case under the provisions of the Care Act 2014. It is regrettable that a such a large cohort of people are still exposed to the possibility of incurring these high costs, which make up a large proportion of their assets. Compared to the original Dilnot proposals, this will be regressive.
Show less
Government response AI summary
The government thanks the Committee for welcoming the social care charging reforms, stating the new £86,000 cap will end worries about unpredictable care costs and that it is highly unlikely anybody within the means test would deplete their assets to anywhere near the theoretical maximum …
Read full response →
HM Treasury
17
Recommendation
Tenth Report - Autumn Budget and Spendi…
Acknowledged
We welcome the reduction in the Universal Credit taper rate. It will provide a stronger incentive for many to take on additional work. The additional money will be welcome for many households. However, the taper rate reduction will be of no benefit for recipients of Universal Credit who are not …
Read more
We welcome the reduction in the Universal Credit taper rate. It will provide a stronger incentive for many to take on additional work. The additional money will be welcome for many households. However, the taper rate reduction will be of no benefit for recipients of Universal Credit who are not able to work. The Government should think carefully about how it intends to support such people, given the increases in the cost of living that are emerging. (Paragraph 113) 46 Autumn Budget and Spending Review 2021 Budget process
Show less
Government response AI summary
The government acknowledges the Committee's support for the reduction in the Universal Credit taper rate and comments on the cost of living, stating they are providing total support worth over £20 billion across this financial year and next.
Read full response →
HM Treasury
18
Recommendation
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The Government should wherever possible announce major changes to the rates of existing taxes and the introduction of new taxes at a Budget or other fiscal event such as a Spring Statement. This allows Parliament to consider the measures announced alongside an independent forecast by the OBR of the fiscal …
Read more
The Government should wherever possible announce major changes to the rates of existing taxes and the introduction of new taxes at a Budget or other fiscal event such as a Spring Statement. This allows Parliament to consider the measures announced alongside an independent forecast by the OBR of the fiscal consequences of the measures.
Show less
Government response AI summary
The government notes the committee’s concern and states that it usually announces changes to the tax system at fiscal events, but the Health and Social Care Levy was developed and announced at speed.
Read full response →
HM Treasury
19
Recommendation
Tenth Report - Autumn Budget and Spendi…
Rejected
For both social care announcements, the House was asked to vote on new government policies that came with significant distributional impacts for households, without the usual distributional analysis that would be provided alongside a Budget. That was highly unsatisfactory. For major announcements such as this the Government should always provide …
Read more
For both social care announcements, the House was asked to vote on new government policies that came with significant distributional impacts for households, without the usual distributional analysis that would be provided alongside a Budget. That was highly unsatisfactory. For major announcements such as this the Government should always provide Parliament, in good time, with the information required to enable Parliament to make an informed decision. The Government’s social care plans had been under development for a number of years, and it is not clear why the necessary distributional analyses, both by region and by household, were not provided at the time the House was asked to vote. Nor is it clear why the announcements on social care were made in two distinct stages.
Show less
Government response AI summary
The government states that distributional analysis is more appropriate alongside fiscal events rather than individual policy announcements, and that they did publish analysis that took account of the Health and Social Care Levy in October 2021.
Read full response →
HM Treasury
20
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
We are deeply concerned that the rate of the National Living Wage was disclosed to ITV in an unauthorised fashion prior to the Budget, and we agree with the Treasury that this could have caused confusion in the market as to whether the information was accurate.
Read more
We are deeply concerned that the rate of the National Living Wage was disclosed to ITV in an unauthorised fashion prior to the Budget, and we agree with the Treasury that this could have caused confusion in the market as to whether the information was accurate.
Show less
Government response AI summary
The government acknowledges the Committee's concern regarding the leak of the National Living Wage announcement and states it will conduct a review of handling arrangements ahead of future announcements.
Read full response →
HM Treasury
21
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The rate at which the National Living Wage is set will clearly affect some companies and sectors which have large numbers of staff at the minimum wage more than it affects others who do not. Some of those firms will be listed on the stock exchange. We therefore believe that …
Read more
The rate at which the National Living Wage is set will clearly affect some companies and sectors which have large numbers of staff at the minimum wage more than it affects others who do not. Some of those firms will be listed on the stock exchange. We therefore believe that the policy may be considered to be inside information as defined by the FCA’s Best Practice Note on the Market Abuse Regulations. In addition, given that the ONS deems retrospective wage data to be market sensitive, we believe it is not unreasonable to conclude that the announcement of the change to the National Living Wage rate might have been market sensitive.
Show less
Government response AI summary
The government notes the Committee's concern regarding the announcement of the National Living Wage and will conduct a review of handling arrangements ahead of future announcements.
Read full response →
HM Treasury
22
Conclusion
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The Committee acknowledges that certain Budget measures might be released prior to the Budget, in line with the Treasury’s “Macpherson principles”. However, under no circumstances should market sensitive policies be able to enter the public domain in a disorderly fashion.
Read more
The Committee acknowledges that certain Budget measures might be released prior to the Budget, in line with the Treasury’s “Macpherson principles”. However, under no circumstances should market sensitive policies be able to enter the public domain in a disorderly fashion.
Show less
Government response AI summary
The government acknowledges the Committee's concern regarding the leak of the National Living Wage announcement and states it will conduct a review of handling arrangements ahead of future announcements.
Read full response →
HM Treasury
23
Recommendation
Tenth Report - Autumn Budget and Spendi…
Acknowledged
The Permanent Secretary to the Treasury has written to us stating the Government will review the arrangements for such policies ahead of future announcements. Given the potential opportunity for disruption that this unauthorised leak could have caused, the Government should investigate how this policy came to be leaked prior to …
Read more
The Permanent Secretary to the Treasury has written to us stating the Government will review the arrangements for such policies ahead of future announcements. Given the potential opportunity for disruption that this unauthorised leak could have caused, the Government should investigate how this policy came to be leaked prior to the Budget, and should publicise its findings. (Paragraph 138) Autumn Budget and Spending Review 2021 47
Show less
Government response AI summary
The government acknowledges the Committee's concern regarding the leak of the National Living Wage announcement and states it will conduct a review of handling arrangements ahead of future announcements.
Read full response →
HM Treasury