The Chancellor’s documents come accompanied by an independent report from the Office of Budget Responsibility (OBR).
In this post we give you some of the headlines and first-look analysis, including what’s new for Culture and Education, and what is missing.
What was in the announcement?
The Chancellor’s headline speech included lots of language that we were expecting, with a particular focus on productivity and skills, as well as the inevitable ‘levelling up’. He also spoke about young people and families, with a very welcome reference to the importance of the first 1001 days of a baby’s life.
This Spending Review looks to be broadly more positive than we expected, with fewer cuts announced than anticipated, and a strong package of tax reliefs that will make a huge difference to many in the cultural sector.
It is fantastic to see the re-confirmation of the Youth Investment Fund, the extra money for investment into cultural infrastructure, and for recovery. As ever, we are concerned by the language of ‘national treasures’ that is used to describe this, and would urge the government to look to support the full, broad and diverse range of organisations and individuals that make up the cultural ecology.
We are very surprised and concerned not to see any re-confirmation of the £90 million Arts Premium for the arts in schools, especially at this time when it is most needed. We look to the Government to urgently clarify the status of this funding. We are also awaiting the further publication of the settlement for Higher Education.
Sunak announced that every government department would see a real-term or post-inflation rise to its allocation. This is great news, but it is really important to note that Departments will then decide internally how this will be passed on and spent amongst their portfolios, so, for example, the Department of Digital, Culture Media and Sport (which has received a 2.9% uplift) will now decide on the allocation to its Arms Length Bodies - including Arts Council England. We don’t yet have confirmation as to what this will be.
He also announced the end of the public sector pay-freeze, but some analysts have already pointed out that the increase may not beat inflation, and, given the budget as a whole, might not ensure that workers are better off.
The BBC is reporting that this budget represents an uplift for the Devolved Nations: Scottish government funding is up by £4.6bn, Welsh government funding by £2.5bn, and there is £1.6bn for the Northern Ireland Executive, via the Barnett formula.
Here are the details by Department:
Digital, Culture, Media and Sport (DCMS)
Tax Relief on developing and delivering exhibitions and performances for museums, galleries, orchestras and theatres will continue, which is excellent news.
- From 27 October to 31 March 2023 (1 year and 5 months) the tax relief will double to 45% and 50%.
- For the 2023/24 financial year, the rates will be 30% and 35%.
- The museums and galleries exhibition tax relief will finish on 31 March 2024 and the theatre and orchestra relief will then go back to 20% or 25%.
However, the Creative Industries Federation has issued a statement expressing its disappointment in the limited expansion of tax reliefs for Research and Development (which currently excludes much of the Creative Industries).
Sunak’s announcement states that over the next three years the DCMS will:
- invest over £850 million for cultural and heritage infrastructure to safeguard national treasures and boost culture in local communities and on high streets
We await the detail of this, and wonder whether or how it may link to the Cultural Investment Fund?
- provide £52 million in new funding for museums and cultural and sporting bodies next year to support recovery from COVID-19, and an additional £49 million in 2024-25 to thrive thereafter
- Provide £14 million per year for three years to ‘support our world-leading creative industries, including supporting SMEs, to scale up and provide bespoke support for the UK’s independent film and video game industries’.
- fund the £800 million Live Events Reinsurance Scheme and an extension to the £500 million Film & TV Production Restart Scheme, to enable UK events and productions to thrive and plan with certainty
- commit to work with relevant Arms’ Length Bodies and their sponsoring departments to update and codify the operational and financial freedoms first introduced in 2013 for such organisations, to ensure that the freedoms are fit for purpose and that all stakeholders understand their scope going forward.
Again, we await more detail on the reforms alluded to in this last bullet point - particularly on whether they will reference the Arms-Length Principle.
The DCMS is also planning to invest over £480 million in funding for a year of celebration across the UK in 2022, for the Commonwealth Games, Unboxed: Creativity in the UK and the Queen’s Platinum Jubilee.
Department for Education (DfE)
The DfE has been given an 2% uplift per year for three years, and the Chancellor announced that this would ensure a return to 2010 levels of per-pupil funding for schools by the end of this Spending Review.
A surprise announcement from Sunak was the inclusion of a further £1.8 billion for Education Recovery, including a £1 billion extension of the Recovery Premium, extra funded hours for 16-19 yr olds, and a reaffirmation of funding for tutoring.
This brings the Government’s investment into education recovery to a total of around £5 billion, which still falls far short of the £10 - 15 billion called for by the Recovery Tzar, Kevan Collins
A further package in the announcement includes:
- £500 million in expanded support for children and families, including £300m for local authorities to transform services in new local Family Hubs,
- Holiday Activities and Food (HAF) funding of £200 million a year
- an increase in the rate to be paid to early years providers for the government’s free hours offers.
The BBC has pulled together responses from all the major education unions and the Early Years Alliance. All state that the funding announced will not be enough to match rising costs and need.
It is really excellent news that £560 million for youth services in England (a Manifesto promise) has been re-confirmed in this Budget - including funding for the government’s commitment to a Youth Investment Fund which will deliver up to 300 youth facilities in areas most in need.
The announcement also made provision for skills and life-long learning, funding for the expansion of T-levels and for apprenticeships. FE Week gives us an excellent breakdown of what’s new and what’s not.
Levelling up and Local Authorities
In the last cabinet reshuffle the Prime Minister renamed the Ministry of Housing, Communities and Local Government, the Department of Levelling Up, Housing and Communities (DLUHC). This department also includes the allocation of the £2.6 billion. UK Shared Prosperity Fund (which aims to replace EU funding).
There are a number of relevant key priorities for culture laid-out in the document, though some have been announced previously. They include funding for local cultural assets and regeneration through the £4.8 billion Levelling Up Fund (announcements of first awards, totalling £1.7 billion local investment, here), and through the Towns Fund. We will expect to see more detail on this in the forthcoming Levelling Up White Paper. There has been some controversy about the awarding of Levelling Up funds in Wales by the British government, as this has been seen to bypass devolution principles.
The document sets out Local Government funding separately and states that ‘core spending power for local authorities is estimated to increase by an average of 3% in real-terms each year over the SR21 [Spending Review 2021] period. This follows year-on-year real-terms increases since SR19. This uplift is extremely welcome, especially as Local Government remains one of the most important financial contributors and delivery partners of our work.
In advance of the announcement, the Local Government Association (LGA) published a clear six point plan that showed the exponential increases to the cost of public services, particularly to social care (both children and adults), SEND (Special Educational Needs and Disabilities) and homelessness. The amounts set out in their chart (to maintain current services, not to improve them) far exceed the percentage increase in Sunak’s Spending Review. You can read the LGA’s full response here.
One of the government’s flagship announcements involved the 50% cut in business rates for the retail, hospitality and leisure sector until 2022 (to include cultural businesses). This is excellent news, and it is great to see that LAs won’t be out of pocket - it states in the document that ‘local authorities will be fully compensated for all measures announced in the review’.
What is not in the spending review?
There is no mention of the Arts Premium
In its 2019 Manifesto the Conservatives promised an Arts Premium for Secondary Schools, and this was confirmed at £90 million a year in Sunak’s budget in March 2020. However, the money was never allocated, and in September, Nick Gibb (then Minister for Schools) said that it was under review and would be subject to this Spending Review.
The absence of the Premium in this announcement is a real blow to those working in cultural learning - not least as this is the time when it could be used to enable and support young people’s learning to thrive as part of the broader recovery from COVID-19. We have written to the Department to ask for more clarity on the status of this fund, and will share a response once it is forthcoming.
Further Cultural Learning Investment
We don’t yet know about the allocation of some of other funding that the Department of Education has historically made into cultural learning, including £79 million a year for Music Hubs and £5.2 million for wider initiatives such as the National Youth Dance Company. Again, this funding is critically important to children and young people’s social mobility and life-chances.
Similarly, there is no current information on the Higher Education settlement, which will be published ‘in the coming weeks’ alongside the response to the Augar report. There have been some extremely concerning leaks in the press about some of these changes, including this article from The Guardian on plans to cut creative courses and limit student numbers due to the low-earning status of these subjects.
How are the commitments in the budget funded?
Increase in tax and size of state
The Telegraph has reported that ‘the Office for Budget Responsibility highlighted ‘a significant discretionary increase’ in both the tax burden and the size of the state as Mr Sunak launched the biggest tax raids since 1993, in the aftermath of Black Wednesday.’
Central government has increased income via taxes; National Insurance has gone up 1.25% with the Health and Social Care Levy, and the upper income thresholds will not increase with inflation for Income Tax or National Insurance - pulling more people into higher rate tax bands. Taxes on Dividends will also rise by 1.25%.