The Week, 10 March 2017
This week the Chancellor delivered his first, and last, Spring Budget. Fewer announcements were included than was typical of his predecessor. The NHS will receive a further cash injection of £425 million, there was half a billion both for schools and technical education, and £2 billion for social care. It is the increase in National Insurance Contributions (NICs) for the self-employed that has garnered the greatest interest, with threats of a Conservative backbench rebellion. Whilst a government breaking a manifesto pledge should always be of concern, it would be a mistake to try and block the change. The combination of the previously announced abolition of Class 2 NICs and this increase in Class 4 NICs means that only those whose profit is more than £16,250 will have to pay more tax. The change is fundamental both to fairness and the stability of the tax base.
Charlotte Pickles, Deputy Director and Head of Research
Reformer of the Week
Rt Hon Philip Hammond MP, Chancellor of the Exchequer, who used Wednesday’s Budget to announce the equalisation of NIC rates between the self-employed and employees.
Reactionary of the Week
Rt Hon Philip Hammond MP, who also used Wednesday’s Budget to announce the third ‘emergency’ cash injection into the NHS in just two-and-a-half years, without requiring any substantive reform to the Service.
Good week for…
Facing up to a changing labour market
On Wednesday, the Government sought to shore up the tax base by increasing NICs contributions for self-employed people. Whilst still a minority of workers at 15.1 per cent, both the number and proportion of people in self-employment have increased steadily over the last 15 years. The Institute for Fiscal Studies found that the tax advantage for self-employed people “equates to a subsidy of £1,240 per person per year.”
The “Midlands Engine”
On Thursday, the Government published its Midlands Engine Strategy which includes £392 million of investment to help deliver an “ambitious vision for the region”.
On Thursday, the Office for National Statistics published the latest sickness absence data, showing that in 2016 the fewest days per worker were lost since records began in 1993. Nonetheless, 137.3 million days were lost—with minor illnesses as the most common cause—demonstrating the continuing need to focus on workplace health and wellbeing.
Bad week for…
On Wednesday, the Government used the Budget to announce funding that “will enable the creation of new selective free schools.” It has been unable to point to any robust evidence that an increase in grammar schools will improve social mobility, whereas significant evidence exists that they could harm it.
On Wednesday, the Chancellor announced additional funding for the NHS rather than demanding the Service delivers against its efficiency target and demonstrates real reform as a condition of any further funding.
On Friday, the Public Administration and Constitutional Affairs Committee published Better Public Appointments?—Follow-up, arguing that further progress was needed. Bernard Jenkin, Chair of the Committee, stated: “We remain concerned that there seems to be an effort by Government to weaken the robustness and transparency of public appointments”.
Quotes of the week
“The difference in National Insurance Contributions is no longer justified by the difference in benefits entitlement. Such dramatically different treatment of two people earning essentially the same undermines the fairness of the tax system. Employed and self-employed alike use our public services in the same way, but they are not paying for them in the same way. The lower National Insurance paid by the self-employed is forecast to cost our public finances over £5 billion this year alone. That is not fair to the 85% of workers who are employees.”
Rt Hon Philip Hammond MP, Chancellor of the Exchequer, delivering his Budget speech on Wednesday.
“Actually, the main complaint is not that he went too far by raising national insurance contributions for the self-employed but that he has not gone far enough. Of all the complex, incentive-skewing elements of Britain’s tax system, national insurance is surely the worst…The best thing the chancellor could do is to be the man who finally merges NI and income tax for everyone. Had he done so this week, he would even have swerved accusations about breaking a manifesto pledge (you can hardly be accused of raising a tax if it no longer technically exists).”
Ed Conway, writing in The Times on Friday.
“Technological innovation of the kind represented by the robot has transformed surgery… if we are to continue moving forward, we need disruptive innovators who are ready to challenge dogmatic practice and an environment in which they are free to experiment. What today looks revolutionary is tomorrow’s museum exhibit.”
Lord Darzi, writing in The Guardian on Thursday about the importance of robotics in surgery.
On Monday, Reform held a dinner with Gabriel Wikström, the Swedish Minister for Public Health, Healthcare and Sport, on ‘Shared challenges in healthcare: what can the UK learn from Sweden?’.
On Thursday, Reform held a major health conference. The Rt Hon Jeremy Hunt MP, Secretary of State for Health, gave the keynote speech. Other speakers include Jane Milligan, Sustainability and Transformation Plan lead for North East London, Professor Dame Carol Black DBE, Lord Carter of Coles, Sir David Dalton and Dr Penelope Dash.
On Monday, Alexander Hitchcock, Senior Researcher at Reform, appeared on BBC Radio Gloucestershire to discuss the benefits of larger GP practices. He argued that larger GP surgeries are the future and would better suit the needs of the public today.
On Tuesday, William Mosseri-Marlio, Research Manager at Reform, wrote an article for The Times Red Box ahead of the Budget. He argued public service reform was the only way to address the long-term fiscal crisis.
On Wednesday, Andrew Haldenby, Director at Reform, wrote an article for The Telegraph in response to the Budget. He argued that the right way for the Government to help public services is by turning them into modern, efficient and capable organisations.
On Thursday, Andrew Haldenby wrote a letter in The Times in response to an article on hypothecated NHS tax. He argued that the Government needs to focus on reorganising the NHS so it works more effectively, rather than giving more funding.
On Thursday, BBC News, Sky News, the Mirror, International Business Times and The Guardian, covered Reform’s major health conference, ‘NHS reform at pace and scale’.
On Friday, William Mosseri-Marlio wrote an article for Public Finance following the Budget. He argued that the Chancellor must turn plans into action with public service reform in social care.
This week the Reformer featured a series of articles first published in the Reform health conference brochure:
- Rt Hon Jeremy Hunt MP argued that the only route to long-term stability in the NHS is a more systematic means of sharing best practice.
- Kate Laycock, Researcher at Reform, wrote on ‘Sustainability and Transformation Plans’.
- Ben Dobson, Researcher at Reform, wrote on ‘Workplace health’.
- Alexander Hitchcock wrote how the NHS can provide ‘Better care for less’.
On Friday, Sam Gyimah MP, Parliamentary Under Secretary of State for Prisons, Probation, Rehabilitation and Sentencing, laid out the expected benefits of the Prisons and Courts Bill, which will be introduced in April. This will hand day-to-day control of prisons back to prison governors.
On Monday, in a Vlog, Andrew Haldenby spoke about how public service reform is “accelerating” in light of recent announcements on digital and technology in government, and social care financing.
On Wednesday, Eleonora Harwich, Researcher at Reform, wrote a blog on algorithms in decision-making. She argued that despite clear benefits, government needs to evaluate and carefully manage the risks they bring.