Chancellor Sajid Javid declared an “end [to] austerity" as he set out plans to increase funding across all government departments in his Spending Review yesterday (4 September). He pledged £13.8 billion of investment for 2020/21 spanning areas including health, education, environment and defence, in what he said is the fastest spending increase for 15 years.
"No department will be cut next year. Every single department has had its budget for day-to-day spending increased at least in line with inflation,” Javid said.
He added that the review would help to “boost[…] wages and raise[…] living standards” and “increase productivity”.
The review was met with criticism from the Labour party, with shadow chancellor John McDonnell describing the plans as "grubby electioneering" and accusing the government of "pretending to end austerity when they do nothing of the sort".
Prime minister Boris Johnson also cautioned against pronouncing an end to austerity as Brexit uncertainty rumbles on.
"We of course live in a time of extreme economic uncertainty and I think the big risk in saying that austerity is over is that the economy starts to do significantly worse, which it might if we have a no-deal Brexit," he said. "Then the deficit and debt will start rising and we are in danger of having another dose of austerity to get that over with for a second time."
Here are the key Spending Review announcements that HR should be aware of:
Further education and teaching salaries
Javid confirmed £400 million of extra funding would be channelled into further education in England for 16- to 19-year-olds, after saying that "for too long further education has been a forgotten sector”. This includes investment in supporting the rollout of T-Levels, the new technical and vocational qualifications that provide an alternative to A-Levels. Starting in September 2020, the qualifications will combine a mix of classroom learning and on-the-job experience.
Other announcements on education included increasing spending on schools by £7.1 billion over the next three years and channelling an additional £700 million to support children with special educational needs. Teachers' starting salaries will also rise to £30,000 by 2022-23 under plans to make them among the most competitive in the graduate labour market. Javid said this would help “to attract more of the best graduates into teaching”.
Candida Mottershead, HR director UK and Ireland at Accenture, said the government's plans to invest in further education are "encouraging" and "will positively affect the lives of more than a million 16- to 19-year-olds, giving them the chance to learn the skills they need to find jobs in the modern economy".
"It is also important to remember that there are a number of options available to young people in addition to higher education, namely apprenticeships. Apprenticeship programmes are designed to expand talent pools by finding, training and developing bright young people –school leavers who do not necessarily have any formal qualifications – who are keen to kickstart their career. It’s integral that young people are aware of all the options available to them when choosing their next step after school, so we welcome the government’s plans to invest in this area," she said.
Mottershead said providing more varied further education options will help HR build a more diverse workforce: "The diversity of these options for young people means HR practitioners should be constantly innovating around how they recruit candidates for entry-level positions. HR functions can use the different educational backgrounds potential employees have to help ensure they have a unique and diverse workforce.”
The chancellor announced an additional £750 million to fund the first year of the government’s plan to recruit 20,000 new police officers. There will also be an extra £45 million so that recruitment can start straight away and 2,000 new officers can be in place by the end of March. This followed Johnson’s announcement in July that 20,000 more officers would be recruited, and that it would be made a requirement that all police force applicants hold an undergraduate degree or study for one on the job.
Javid also announced a 5% real-terms increase in resources budget for the Ministry of Justice. He said that the “threats facing police officers are evolving so the way we resource them will have to evolve too”.
Martin Tiplady, CEO of Chameleon People Solutions and former HR director of the Metropolitan Police Service, said that while investment in the force is a positive thing it is only replacing funds that were previously cut.
"Lets remind ourselves that this is simply reinstating some of the 25,000 or so officers that were deleted as part of austerity measures. But it is welcome, as is the ambition to recruit 2,000 by March 2020," he said.
Tiplady added that work allocation of officers must also be a priority: "I do hope that appropriate support resources will be made available as well – else all that will happen is that more officers will carry out administrative and support work and the effect of additional officers will be diluted majorly. The allocation of the officers is also important and I hope will be to a plan that [supports] need rather than simple proportionate allocation. I also hope that there is an urgent plan being developed to recruit and properly train the other 18,000 officers to a rapid timeframe."
NHS training and development
As part of spending on health, Javid pledged funding for training and professional development in the NHS, with a new £1,000 personal development budget over three years for every nurse, midwife and allied health professional.
Danny Mortimer, chief executive of NHS Employers, said that while increased funding to train staff is “welcome” the NHS workforce requires long-term investment.
“Following major reductions in central CPD funding in the past five years, employers have been less able to financially support training and development opportunities in the workforce, despite a recognition and understanding of its importance; not only in terms of patient safety but also to aid the retention of our talented workforce,” he said.
“The new funding promised... is therefore welcome but must be the start of an ongoing commitment to invest in the NHS workforce, most particularly in ensuring long-term recruitment of staff, particularly in areas of greatest shortage such as mental health and learning disability nursing.”
More should also be done to improve the working conditions of NHS employees, Mortimer added: "Investment is also needed to improve working environments and equipment for our teams, and in social care so that our people can have jobs founded on being able to do the very best for the communities they serve.”
What was missed
While the Spending Review included a pledge to invest more in training and professional development for doctors and nurses, expectations that Javid would address ongoing NHS pensions challenges were not met. The tapered annual allowance means that some NHS staff face higher taxes on pensions when they take on extra shifts. This is leading to some senior health professionals turning down work or retiring early.
Johnson had promised action on pensions taxation policy during his leadership campaign.
Pensions director at Aegon Steven Cameron called the Spending Review a “missed opportunity” to stop the pension drain on NHS talent.
“While the chancellor’s additional funds for the NHS will be welcomed, he offered no solutions to the NHS pension scheme issues that are causing a dangerous drain on talent. As a result of the tapered annual allowance, which gradually reduces the amount that can be paid into pensions from £40,000 to £10,000, highly-paid professionals are turning down extra work or retiring early to avoid big tax bills,” he said.
“While the NHS needs money it also needs to retain its talent. It can’t be right that a little-known technical pensions rule is putting that at risk. We urge any doctor considering retiring early to first seek professional financial advice.
“While the immediate priority may be to stop this NHS talent drain, the issue affects individuals across employment sectors. A solution that picks certain occupations for special treatment would be unfair and divisive. This means we need a solution that applies across the country, encouraging rather than penalising saving for retirement.”
The Spending Review came amid the possibility that the UK is headed for another general election. MPs took control of the House of Commons on Tuesday (3 September) ahead of backing a Bill to block a no-deal Brexit on Wednesday.
Opposition MPs and Tory rebels secured 329 votes to 300 for the Bill to pass its first stage, and the government has said that all stages of the bill will be completed on Friday (6 September). If passed in full it will force Johnson to ask the EU for an extension to the 31 October Brexit deadline if a deal has not been agreed. Johnson has said he will call a general election if the Bill is passed.
This came the same day as a judge ruled that Johnson’s plan to prorogue parliament for five weeks ahead of Brexit is legal.