UK Budget Assessments
2017 Spring Budget: WBG full analysis
Date Posted: Friday 10th March 2017
2017 Spring Budget
Key findings of our assessment of the 2017 Budget are as follows:
Equality Impact Assessment
The Treasury continues to fail to carry out a meaningful equality impact assessments of its policies. While there was a distributional analysis by household income of the cumulative impact (by 2020) of changes announced since 2015, there was no cumulative analysis by the protected characteristics covered by the Equality Act. It remains difficult to see how the Treasury can demonstrate compliance with its legal obligations under the Public Sector Equality Duty to have ‘due regard’ to equality without such an assessment. As in previous years, there were equality impact assessments for some specific policy decisions but these were not comprehensive.
WBG cumulative impact assessment
In the absence of a meaningful impact analysis from the Treasury, the Women’s Budget Group continues to produce an independent cumulative impact assessment. Our cumulative impact assessment of changes to tax, benefits and spending introduced since 2010 showed that, by 2020, women, in particular black, Asian and women from ethnic minority backgrounds, and the poorest families would lose the most. Asian women in the poorest third of households stand to lose 19% (a cut of £2250 per year) of their annual net individual income by 2020 compared to white women in 3 the same income group who would lose 12% and Asian men who would lose 10%. Families with both a disabled adult and a disabled child stand to lose 20% of their household annual living standard from cuts to benefits and services in 2020-21 (£14,000 per year for lone parent families and £18,000 per year for couple families).
Although there have been no further cuts to social security in this Budget as promised in 2016, women continue to be disproportionately affected by cuts and freezes to benefits, tax credits and universal credit since 2010. These have not been compensated for by the rise in the minimum wage. Furthermore, a series of changes due to take place in April 2017 will have a disproportionate impact on women including the two child cap for tax credits and universal credit, the abolition of the first child premium/family premium in child tax credits/universal credit and increased conditionality for parents claiming universal credit.
National Insurance contributions and Tax
The announcement that Class 4 National Insurance Contributions for the self-employed would increase from 9% to 11% was reversed within a week of the Budget. Taken together with the abolition of Class 2 NIC contributions announced last year this would have been a progressive measure, leaving the lowest income self-employed better off and would have benefitted women more than men, since self-employed women have lower incomes on average (see WBG distributional assessment of the NICs change by income and gender on pages 13-14). The cut in the Dividend Tax Allowance (the amount that can be earned from investment dividends before tax) from £5000 to £2000 will affect more men than women, since men are more likely to have investment income.
The most significant spending announcement in the Budget was an additional £2bn for social care over three years. This additional funding and the commitment to publish a Green paper on the funding of social care are welcome. However, the additional money is not sufficient to fill the funding gap in social care. Women, as the majority of those in need of care and also the majority of paid and unpaid carers, will continue to be disproportionately impacted while the crisis in social care remains unaddressed. Significant public investment is needed now: although the government has invited yet another consultation for long-term funding solutions, this only postpones the implementation of sustainable solutions already set out over the last 11 years in two major reports (Walness 20062 and Dilnott 20113 ).
There were two announcements of additional health spending: £100 million for capital investment in A&E departments to help manage demand on A&E services and £325 million over the next three years for the ‘strongest’ Sustainability and Transformation Plans. These relatively small sums will not address the crisis in NHS funding that is both affecting patient care and increasing pressure on NHS staff.4 Public spending on health (including capital expenditure) is projected to be lower as a proportion of GDP by 2020 than it is this year. The crisis in the NHS is having a disproportionate impact on women, who are slightly more likely to use health services and who form the majority of the NHS workforce.
The Chancellor announced £320 million by 2020 to establish 30 new free schools and £20 million to provide transport to grammar schools for pupils who receive free school meals. Funding for pupils in mainstream education has suffered a real terms decline. The Institute for Fiscal Studies forecasts that by 2020 funding per pupil will have been cut in real terms by 6.5% for schools, and funding for 16-18 education will be at a similar level to 30 years ago. These cuts have put significant pressure on schools, impacting the quality of education for students and the predominantly female workforce.
International Women’s Day Announcements
There were three Budget announcements which the Chancellor explicitly linked to International Women’s Day: £20 million for domestic violence services over three years, £5 million for parents returning to work after a career break and £5 million to celebrate the anniversary of women winning the vote. The additional funding for domestic violence services is welcome but is not sufficient to address the loss of funding as a result of cuts to local authority, police and health budgets. There was no additional money for sexual violence services, despite a £10 million funding gap. It is difficult to see how the £5 million for ‘returnships’ can address the major structural barriers to women in the workplace (and note that the scheme can be accessed by either parent). In sum, £30 million in the context of a government budget is at best ‘small change’ and stands in proportion to the sums that have been taken from women’s purses as a result of successive benefit cuts and freezes since 2010.