8 Things Buried In Philip Hammond's Spring Statement

Austerity is not over yet, there's no cash for councils, and a lot of Brexit impact

Brexit may be the focus of the UK’s politicians and media at the moment, but the world hasn’t stopped turning – and neither have the wheels of government.

Chancellor Philip Hammond took to the despatch box to update the country on the UK’s finances and deliver his Spring Statement on Wednesday.

Among his announcements were £100m for police forces to tackle the knifecrime crisis, a £3 billion affordable homes scheme and the end of fossil-fuel heating systems in all new houses from 2025.

But here are a few things you might have missed buried in the small print.

1. Austerity is not over

The benefits freeze was introduced by George Obsorne in 2016
The benefits freeze was introduced by George Obsorne in 2016
PA Wire/PA Images

Theresa May said in her conference speech last year that “people need to know austerity is over” and that “their hard work has paid off” after swingeing cuts to welfare and public services.

But Hammond used his Spring Statement to confirm the fourth and final year of the benefits freeze – due to start on April 1 – will go ahead as planned.

The Joseph Rowntree Foundation (JRF) said keeping the benefits freeze in place will leave families that are impacted £560 a year worse off on average, and the Child Poverty Action Group (CPAG) said it was “dismayed”.

The freeze, which applies to Universal Credit, child benefit, tax credits, housing benefits, income support and some disability benefits, was created by former chancellor George Osborne and came into force in 2016.

The House of Commons Library said typical parents in work with two children would be £1,845 better off in 2019/20 if it were not for the policy.

2. Business investment has paused

Business investment growth in the UK has been falling consistently and is now the weakest in the G7.

It fell 0.9% last year and will fall 1% this year as firms grappling with the uncertainty around Brexit hold off on investing.

Analysis from the OBR, the public body which provides government with independent forecasts and figures, said: “Business investment has fallen for four consecutive quarters – its longest continuous decline since the [2008] financial crisis.”

3. A screeching u-turn on energy efficient homes

Gordon Brown. He was the future once.
Gordon Brown. He was the future once.
PA Wire/PA Images

Former Labour chancellor Gordon Brown (remember him?) back in 2006 announced plans to force housing suppliers to make all new UK homes energy efficient.

The pledge was scrapped by George Osborne in 2015 in a bid to cut red tape for house-builders.

But the idea has been dusted off and re-introduced, with Theresa May’s chancellor trumpeting plans that “new build homes are future-proofed with low carbon heating and world-leading levels of energy efficiency”.

Green MP Caroline Lucas took Hammond to task: “The chancellor’s statement was littered with contradictions. He announced energy efficiency standards for new homes, which his party scrapped in 2015.”

4. Trade will fall after Brexit

Extra friction between Britain and the European Union means that imports and exports will slow over a ten-year period, the OBR analysis said.

Experts calculated this based on “external studies of different possible trade regimes” and assumptions about the government’s negotiating aims in Brexit talks.

The “substantial fall” in the value of sterling which followed the 2016 Brexit vote has only provided “a modest boost to net trade”, it added.

“While trade outturns have been volatile, net trade has been significantly weaker than we expected – reducing GDP growth since the referendum rather than raising it,” the analysis said.

5. Growth is slowing down

The OBR has revised down the growth projections for the UK economy trumpeted by Hammond at his Autumn Statement last year.

It has said that UK GDP is set to grow by 1.2% in 2019, which is less than the 1.3% it forecast previously.

6. Brexit will hit net migration

PA Archive/PA Images

The government will miss its target to lower net migration to below the “tens of thousands” - but Brexit will see migration fall, the OBR said.

This is a worry for the NHS, which recruits many of its nurses and medics from outside the UK, as well as sectors such as social care, hospitality and farming.

But government policy and the economy, rather than any hostile anti-EU rhetoric, is to blame.

The OBR said “pull factors” such as a fall in the value of UK wages due to a weaker pound, will influence potential migrants.

It added that lower migration could further hit growth: “While the immigration regime following Brexit is still uncertain, were it to be stricter, the result would be a smaller population and labour force which in turn would reduce potential output.”

7. Knife crime cash dwarfed by £3bn town hall funding blackhole

Tory peer Lord Porter chairs the LGA and says he is "disappointed" with Hammon's spring statement
Tory peer Lord Porter chairs the LGA and says he is "disappointed" with Hammon's spring statement

One of the main headlines to come out of the Spring Statement was a ring-fenced £100m for police forces to tackle knife crime.

But Hammond offered little to help cash-strapped townhalls, instead announcing a three-year spending review to report at the Autumn Statement.

But the Local Government Association has stressed council bosses, many of whom are looking for ways to fund schemes to target youth violence, cannot wait that long.

LGA chairman, the Tory peer Lord Porter, said: “With councils still facing a funding gap of more than £3 billion in 2019/20, it is disappointing that the chancellor has missed the opportunity to use today’s Spring Statement to provide further desperately-needed funding for our under-pressure local services this year.”

8. Free sanitary products not available to children in Year 6

Hammond was praised for his decision to fund free sanitary products in secondary schools amid widespread concerns girls who cannot afford them were missing class.

He said: “Too many girls miss out on vital education each month as a lack of access to sanitary products forces them to miss school. Even those pupils who do not suffer period poverty will benefit from free access to sanitary products.”

But the National Association of Head Teachers said this should also have been made available to older primary school girls in Year 6.

Paul Whiteman, general-secretary of the National Association for Head Teachers said:

“Even those pupils who do not suffer period poverty will benefit from free access to sanitary products, ensuring no child is without protection during what can be a very stressful and vulnerable time.

“It would, however, be good to see free sanitary products further extended to Year 6 as many girls start their periods before secondary school.”

Lucy Russell, head of girls’ rights and youth at the children’s charity Plan International UK, added: “It isn’t enough just to provide free period products to schools.

“If we’re to put an end to period poverty then we also need to tackle the ‘toxic trio’ of issues at the root of the problem - namely high-cost period products, lack of education and the stigma and shame surrounding periods.”


What's Hot