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Budget Roundup 2017

Posted By George Selmer FIEP, 26 November 2017

Thin gruel with the promise of thin gruel tomorrow

by George Selmer FIEP

From the perspective of the employment and skills sectors, this is a bleak budget. Given the economic outlook, this is bad news for everyone.

The Office of Budget Responsibility has downgraded its productivity growth forecasts. This means that it has also revised down its economic growth forecasts. To cap it all off, they then expect this to lead to a rise in unemployment. As Duncan Melville from the Learning & Work Institute commented, ‘this is not a happy outlook for the UK.’

But, we can’t be surprised. We’ve been heading here since the 2015 Comprehensive Spending Review. March’s Budget had very little new to say about employment and skills. And, at the General Election, neither of the main parties had very much to say about active labour policy - as I wrote at the time. I did note five key things that stood out in the Conservative manifesto, and so let’s take a look at last week’s Budget against those themes.

"They’re done with radical welfare reform.”

There are some welcome changes to Universal Credit, meaning that people will have to wait less time for their money. But the changes are nowhere near substantial enough. The £3bn cuts to the UC work incentives have not been reversed and the freeze on working age benefits remains in place. The system remains a pale and ineffective shadow of the original principle - which was to bring fairness and simplicity to the system and to make the transition from benefits to work pay.

"They’re hoping to reduce the disability employment gap.”

And hope they continue to. The Work and Health Programme will make a dent, but - as I’ve written before - simply lacks the resource needed to make an impact. You can’t deliver social and economic change through hope. It requires a plan, commitment and investment.

"They’re up for incentivising employers.”

The Conservative manifesto pledge to support the recruitment of unemployed or disadvantaged individuals through a one-year holiday on National Insurance contributions doesn’t seem to have made it into the administration’s first Budget.

“They’re aware of the EU funding gap.”

They might well be, but there was no mention of any plans that committed the government to meeting it. I’ve written before about the huge social and economic impact that will simply disappear in the absence of the European Social Fund or a successor.

“There’s a real drive on productivity and skills.”

There’s a lot of talk about it, yes. Most of the devolution deals contain plenty of plans for a range of talking shops to supposedly integrate employment and skills better.

But, the initial funding for a National Retraining Scheme doesn’t make any long-term commitments and there’s little other significant investment in what can only be described as a national crisis - given that we are now at the back end of the worst decade for UK productivity since the Napoleonic wars.

There’s continued muttering about talking about increasing the flexibility of the Apprenticeship Levy, but no real action - and certainly no response that would install some confidence in a market that is struggling to recover from the cliff-edge it hurtled over in May 2017. The 3 million target looks increasingly difficult, the overall amount of money in the Levy is forecast to be less than previously expected and there are no mechanisms in place to ensure that the Levy gets spent.

We are where we are

The nightmare scenario is that we will continue to cut investment in education, training and employment support right up to and through the point in the economic cycle when we will need it most - having already under-invested our way sluggishly out of the last downturn.

Stephen Evans described this as a ‘baby-steps’ budget, which gives an optimistic sense that we might be moving in the right direction - albeit too slowly. I’m not sure that I share Stephen’s optimism (or, perhaps, his diplomacy!) My fear is that we have a government that is swamped by Brexit, lacking substance behind what vision it has and too tired to deliver any of it. I hope that I am wrong.

In the face of all this, we must keep doing what we do best, do it better and continue to fight for both our own survival and the citizens that deserve world-class education and employment support services.

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