Recommendations & Conclusions
24 items
1
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
2
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
3
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
4
Conclusion
Tenth Report - Autumn Budget and Spendi…
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. I note the Committee’s conclusions on R&D spending ambitions. The Spending Review settlement announced an increase in public R&D investment to record levels, providing £20 billion across the UK by 2024–25. This settlement delivers significant progress towards the government’s ambitions …
HM Treasury
27
Recommendation
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I note the Committee’s conclusions on R&D spending ambitions. The Spending Review settlement announced an increase in public R&D investment to record levels, providing £20 billion across the UK by 2024–25. This settlement delivers significant progress towards the government’s ambitions …
HM Treasury
5
Conclusion
Tenth Report - Autumn Budget and Spendi…
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.
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
6
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
7
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
8
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I note the Committee’s conclusions on the Spending Review. We are exceeding our commitments to replace EU funding in full, with no reduction through the UK Shared Prosperity Fund (UKSPF). The UKSPF replaces the European Regional Development Fund (ERDF) and …
HM Treasury
9
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
10
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their conclusions on the government’s fiscal strategy. 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 …
HM Treasury
11
Conclusion
Tenth Report - Autumn Budget and Spendi…
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.
Government response. I note the Committee’s conclusions on the Spending Review. We are exceeding our commitments to replace EU funding in full, with no reduction through the UK Shared Prosperity Fund (UKSPF). The UKSPF replaces the European Regional Development Fund (ERDF) and …
HM Treasury
12
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I note the Committee’s conclusions on the Spending Review. We are exceeding our commitments to replace EU funding in full, with no reduction through the UK Shared Prosperity Fund (UKSPF). The UKSPF replaces the European Regional Development Fund (ERDF) and …
HM Treasury
13
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I note the Committee’s conclusions on the Spending Review. We are exceeding our commitments to replace EU funding in full, with no reduction through the UK Shared Prosperity Fund (UKSPF). The UKSPF replaces the European Regional Development Fund (ERDF) and …
HM Treasury
14
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for welcoming our social care charging reforms. The new £86,000 cap will end people’s worries that they may face unpredictable care costs, with roughly two thirds receiving some state support for care costs under the announced …
HM Treasury
15
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for welcoming our social care charging reforms. The new £86,000 cap will end people’s worries that they may face unpredictable care costs, with roughly two thirds receiving some state support for care costs under the announced …
HM Treasury
16
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for welcoming our social care charging reforms. The new £86,000 cap will end people’s worries that they may face unpredictable care costs, with roughly two thirds receiving some state support for care costs under the announced …
HM Treasury
17
Recommendation
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I thank the Committee for their support for the reduction in the Universal Credit taper rate, and for their comments on the cost of living. Recognising the current challenge households are facing with the cost of living, the government is …
HM Treasury
18
Recommendation
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I note the Committee’s concern about the announcement of the Health and Social Care Levy outside of a fiscal event. The government announces most changes to the tax system at fiscal events and through the Tax Administration and Maintenance command …
HM Treasury
19
Recommendation
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. I note the Committee’s comments about the publication of distributional analysis of the Health and Social Care Levy. The impact of government policy on households across the income distribution depends on the cumulative impact of policies, meaning it is usually …
HM Treasury
20
Conclusion
Tenth Report - Autumn Budget and Spendi…
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.
Government response. On the announcement of the National Living Wage, I note the Committee’s concern and the government will conduct a review of handling arrangements ahead of future announcements.
HM Treasury
21
Conclusion
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. On the announcement of the National Living Wage, I note the Committee’s concern and the government will conduct a review of handling arrangements ahead of future announcements.
HM Treasury
22
Conclusion
Tenth Report - Autumn Budget and Spendi…
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.
Government response. On the announcement of the National Living Wage, I note the Committee’s concern and the government will conduct a review of handling arrangements ahead of future announcements.
HM Treasury
23
Recommendation
Tenth Report - Autumn Budget and Spendi…
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 …
Government response. On the announcement of the National Living Wage, I note the Committee’s concern and the government will conduct a review of handling arrangements ahead of future announcements.
HM Treasury