Autumn Statement November 2016: summary and analysis
The Autumn Statement is one of the key fixtures on the political calendar, but this year’s had been more hotly anticipated than most.
It provided the first parliamentary set piece moment for the new Chancellor to indicate the country’s economic direction of travel following our decision to leave the European Union in June.
Much of the accompanying mood music had suggested a break with the past, both in style and substance. We would see a more sober, less political chancellor with none of the wheezes and gimmicks that came to define his predecessor’s tenure in No 11. And we would hear a new economic strategy to reflect the huge uncertainties brought about by Brexit and address the stark inequalities that lay behind the leave vote.
We got some signs of a new approach, with the target of a budget surplus by 2020 formally dropped and a more flexible fiscal framework put in place. But as the Chancellor finished with a flourish – announcing he was abolishing the Autumn Statement – the overwhelming impression was of continuity: that an opportunity had been missed to set a new course and many of our big economic and social challenges had been left unaddressed.
This briefing picks up all the big announcements and investigates their likely impact on Locality’s members and the communities our members work with.
In particular, it includes more detail on:
- A missed opportunity to invest in communities
- New money for affordable housing
- Devolution: Ongoing, but not onward
- Policies for the ‘jams’
- Funding and tax changes for charities
A missed opportunity to invest in communities
The big shift in the Autumn Statement was on fiscal policy, with the Chancellor announcing new rules to allow substantial borrowing for investment in infrastructure and innovation. A £23bn National Productivity Investment Fund has been established, which will target spending on the government’s strategic priorities to boost economic productivity and stave off the prospect of a Brexit-induced downturn. Housing, transport, digital communications, and research and development, will all benefit over the next five years.
The money may be new, but the focus on big ticket infrastructure projects is very much in keeping with recent history. We think a more sophisticated approach is needed if we are truly going to build ‘an economy that works for everyone’. To tackle deeply-entrenched inequalities, we need to invest in a different kind of infrastructure. That’s why in the months leading up to the Autumn Statement, we’ve been calling on the government to invest in a major programme of support for community assets, to ensure that any economic stimulus package has a tangible impact on local jobs, local economies and communities.
Locality led a cross-sector proposal to the Treasury – along with CFG, NCVO, NAVCA and others – on greater funding for community asset ownership. And at Locality’s Convention earlier this month, we launched Places and Spaces: The future of community asset ownership, which called for a £1bn Community Asset Investment Plan, to provide co-ordinated support from government, funders and social investment.
We’ve asked central government to provide £125 million of this fund – a fraction of the hundreds of millions of pounds the Treasury has just found to renovate Wentworth Woodhouse, a stately home in the Yorkshire countryside, and Buckingham Palace. The Autumn Statement was a huge missed opportunity to protect much loved public land and buildings right across the country, and invest in a programme of community asset development which would empower communities, reshape public services and regenerate local economies.
We are going to be using our ‘Places and Spaces’ report to focus political attention on community assets over the coming months and we need your help to make the case. We want members to get in touch with their local MPs and ask them to support our call for investment in crucial community spaces. We also want to hear your stories of how community ownership of assets has transformed neighbourhoods for the better – and examples of places that are currently under threat. Please see the end of this briefing for more information on how to get in touch.
New money for affordable housing
A key priority for the National Productivity Investment Fund is to tackle what the Chancellor described as ‘the housing challenge’ (we call it a crisis). A new £2.3bn Housing Infrastructure Fund will unlock land for housebuilding in areas of high housing demand and will be allocated to local government on a competitive basis.
An extra £1.4bn was also announced to build 40,000 affordable homes, on top of £4.7bn that was announced earlier this year. Previously this had been targeted exclusively at home ownership, but the Chancellor has removed restrictions to allow houses of a range of tenures to be built. This will, the government says, ‘meet the housing needs of people in different circumstances and at different stages of their lives’.
We have been making representations to DCLG on the opportunity for community-led housing to fulfil precisely this aim, and provide small-scale, locally-developed housing, designed and managed according to local priorities. We will be continuing to push this as the government prepares to launch a new housing white paper.
Devolution: Ongoing, but not onward
With the Northern Powerhouse so closely associated with George Osborne, some feared that devolution would cease to be a central part of this government’s economic strategy. Philip Hammond laid those fears to rest in the Autumn Statement, telling parliament that devolution remains “at the heart” of the government’s plans for local growth.
So while there were no new English devolution deals announced, further powers will be devolved to the West Midlands, Greater Manchester and London to address ‘productivity barriers’, and new city deals were announced in Scotland and Wales. Perhaps most significantly, mayors of newly established combined authorities will be allowed borrow to invest in ‘economically productive infrastructure’.
But in sticking to the Northern Powerhouse script, the new Chancellor continues a narrow approach to devolution, focused on cities rather than the whole country. There remains a worrying lack of engagement with communities and the community sector, and the opportunities to harness the capacity and ideas of local people and organisations are being missed. Devolution should bring about a renaissance in neighbourhood level governance and decision making, but the Chancellor has missed yet another opportunity for central government to state a commitment for combined authorities to embed ‘onward devolution’.
Locality will be launching an independent commission on the future of localism in the new year, chaired by Lord Kerslake, to ensure that devolution truly puts power into the hands of local people. This will build on the five principles we developed in partnership with NAVCA for what good devolution should look like.
Policies for the ‘jams’
Much of the government’s pre-Autumn Statement briefing had focused on the prospect of cash giveaways for what the political jargon now calls the ‘jams’: people who are ‘just about managing’. This materialised in the form of a further rise in the tax-free personal allowance; an increase in the ‘national living wage’; and a slight reduction on the taper rate for universal credit.
The Chancellor also told parliament that there would be no further cuts to departmental spending beyond those that have already been announced. This was presented as a ‘good news’ story, but means that public services, local government and communities will continue to face huge pressures from the austerity measures that are already in place. Most notably, there were no announcements of any further funding to avert a looming health and social care crisis. Nor were there any moves to allay fears that local authorities in disadvantaged areas face serious budget shortfalls from the phasing out of the central government grant and the shift to 100% business rate retention.
Overall, the Office for Budget Responsibility paints a picture of an economy struggling under the weight of post-Brexit uncertainty, with growth down, debt rising, and a £59bn hole in the public finances. So despite previous claims that ‘austerity is over’, it is clear that tough spending restraint will continue for the foreseeable future.
This makes the work Locality’s members do more important than ever. Community anchor organisations provide a huge range of services for those who are ‘just about managing’, and those who aren’t managing at all. They build local economic resilience, supporting communities through short-term shocks and long-term changes alike. As part of our Keep it Local work, we’re working with six local authorities to develop a framework for measuring this economic resilience, so we can make the case to government that the best way to sustain the economy is to invest in local communities.
Funding and tax changes for charities
There were only two specific mentions of charities in the Autumn Statement. The first is confirmation of Gift Aid reforms aimed at making it more flexible and simplifying the process for donors making digital Gift Aid donations
The second is in the continuing use of banking fines and the tampon tax to support particular good causes. We’ve repeatedly called for the government to take a much more strategic approach to charitable windfalls, and had hoped this less overtly political Chancellor would see the value in using this money to build long-term capacity in the voluntary and community sector, rather than pet political projects. We’ll continue to work with our colleagues across the sector to set out how future funds can be used most effectively.
Elsewhere, changes were made to salary sacrifice schemes, as part of a package of measures to tackle tax avoidance. Bundles of non-financial benefits which may constitute part of employers’ payments to employees are being clamped down on, increasing the amount employers have to pay out as National insurance contributions. The good news, however, is that pension, childcare and travel to work initiatives are exempt, meaning most charities will not be affected by the change.
Contact details and next steps
The Policy Team at Locality will be keeping you updated with further analysis emerging out of the Autumn Statement.
To find out more about how you can support our work on community ownership of assets and our call for a Community Asset Investment Plan, please visit: http://locality.org.uk/projects/places-and-spaces/
Any questions or comments, please do get in touch with Locality’s Policy and Public Affairs Manager Ed Wallis at or Policy Officer Ruth Breidenbach-Roe at