The Week 24 November 2023
Publications, events, an autumn statement… and lunch at the top of the BT Tower. It has been another busy week at Reform.
The main event was, of course, the autumn statement. Compared to some past chancellors Jeremy Hunt was predominately focused on policies rather than punchlines. You can read our full snap analysis here.
The biggest surprise was the 2p cut to employee national insurance. This was part of a slew of measures aimed at alleviating cost of living pressures. Other measures announced included uprating all working-age benefits by September’s inflation rate of 6.7%, increasing Local Housing Allowance to the 30th percentile of local market rents, and increasing the National Living Wage.
We welcome these measures. However, it should be noted that the total tax burden will continue to increase due to fiscal drag. By 2028-29 the total tax burden will stand at a post-WW2 high of 37.7% of GDP.
Beyond these cost of living measures the main bulk of the statement was devoted to growth and supply-side reform. Indeed, Jeremy Hunt said the word “growth” 27 times during his speech — an average of more than two times every minute. 110 growth measures were introduced. These included committing £4.5 billion to “strategic manufacturing sectors”; making full expensing, a policy which allows businesses to deduct the full cost of IT and machinery investment against their profits, permanent; reforming pensions to encourage investment into UK businesses; publishing two action plans, TAAP and CAP, to increase electricity supply and decrease the time it takes to connect to the electricity grid; and reforming the Work Capability Assessment (WCA) in an attempt to increase the number of people in work.
The effort to promote growth is welcome. The only problem? It does not appear to be expected to work. The OBR has revised down their growth forecasts, with the economy now predicted to grow by just 0.7% in 2024 (down from a Spring forecast of 1.8%) and 1.4% in 2025 (down from a Spring forecast of 2.5%).
Ultimately, the truth is that many of the Chancellor’s measures are, to a large degree, possible only because of fiscal drag and tightened departmental budgets. As set out by the OBR, ‘unprotected’ budgets will need to fall by at least 2.3% a year in real terms from 2025-26.
Overall? Cost of living measures, supply side reforms and devolution progress are all welcomed by Reform. However, unrealistic departmental cuts cannot be addressed by efficiency alone.
A plethora of other documents accompanied the publication of the Autumn statement — and we would not blame you if some of them slipped past you!
For one, we now have a summary of the responses and the Government’s response to the consultation carried out into Occupational Health (OH). Building upon Health is Everyone’s Business from 2021, this consultation sought views on how to improve health in the workplace. The Government has committed to introducing a voluntary minimum framework for OH provision and, crucially, explore options specifically targeted at supporting SMEs.
Reform were pleased to see these commitments and they chimed well with the suggestions we heard on Monday during our panel event with Tom Pursglove MP, minister for disabled people, health and work.
The second of these was the Government’s response to Lord O’Shaughnessy’s review into commercial clinical trials, published in May 2023. The initial Government response to Lord O’Shaughnessy’s review accepted all of its recommendations and made five headline commitments to address them, helpfully backed by £121 million. This complete government response sets out the progress made. Backlogs in research approval applications have been cleared by the Medicines and Healthcare Products Regulatory Agency (MHRA) and UK performance in clinical research has surpassed pre-pandemic levels.
Reform are pleased to see progress made and enjoyed discussing this progress on Wednesday during our panel event with Lord O’Shaughnessy.
Onto our read of the week…
On Thursday The Constitution Unit published a report on the future of democracy in the UK.
Based upon research comprising two large-scale surveys and a citizens’ assembly the findings were striking. The majority of participants were dissatisfied with the current state of UK democracy and wanted greater input into the political debate — 76% of people surveyed believed that people had somewhat or far too little influence over how the UK was governed. The report argued that greater attention should be paid to upholding ethical standards in public life; reaffirming the importance of checks and balances; and proactively involving the public in democracy.