Spending Round Briefing – what it means for arts and cultural learning

08 December 2020

On 25 November, Rishi Sunak, the Chancellor of the Exchequer, announced the details of this year’s Spending Round, meaning that he set the budgets for government departmental spending for 2021-2022.

What is the Spending Round?

The government normally undertakes a Spending Round (SR) every three years, setting budgets for that period, but last year they only delivered a one-year Spending Round – largely rolling over the same funding allocations from the previous year. This year was set to be a significant step change, providing funding for many of the commitments in the December 2019 General Election Conservative Manifesto – and building on the March 2020 budget commitments.

However, due to the pandemic, the 2020 Spending Review was reduced to another one-year planning cycle, and the accompanying Autumn Budget (where the government usually updates on its tax plans and in-year spending) was scrapped.

Civil Service work on planning and distribution of the funding from the March 2020 Budget (which included an Arts Premium in Schools, and £500m for Youth Services) was paused as they refocussed their capacity on the emergency. The status of some of that funding is now somewhat unclear.

At the same time as the Spending Round was announced, the independent body, the Office of Budget Responsibility, published its forecasts for the UK public finances. Their outlook is bleak. Our colleagues at the Heritage Alliance have pulled out the following headlines:

  • The UK economy will be around 3% smaller than expected in the March Budget
  • Unemployment is expected to rise to a peak of 7.5% – or 2.6m people – in the second quarter of next year. After which it is set to fall every year, reaching 4.4% by the end of 2024
  • The government will borrow £394bn this year – 19% of GDP
  • Underlying debt is due to hit 97.5% of GDP in 2025-26

The move to a one-year planning cycle is problematic for a lot of our partners as they try and build towards recovery from the pandemic. It makes it impossible for them to plan investment into their longer-term strategies. This is particularly true for local authorities.

It is important to note that there is no new emergency funding for 21/22 in this Spending Review. There is still a contingency of around £280m of £1.57bn Cultural Recovery Fund that has not yet been allocated, and we believe this will need to be distributed in this financial year (20/21). The funding for the Coronavirus Job Retention Scheme and for the Self Employment Income Support Scheme are due to end in March 2021, and there is not funding in the Spending Review to replace or extend them.

There is also no substantial funding announced for the UK’s transition from the European Union. The Spending Review documents state that the ‘heads of terms’ for the government’s planned UK Shared Prosperity Fund (which is envisaged to replace annual receipts to the UK from the EU) will be published in the spring, and that announcement of the amount it will contain will be made in the next Spending Review. 

What are the headline themes of the announcement?

The main themes of the announcement are investment into infrastructure and into the government’s ‘levelling up’ agenda, by which we mean Boris Johnson’s stated aim to address historic inequality of government funding to geographic areas, and to boost economic performance outside of London and the South East. You can read the Institute of Fiscal Studies’ take on this here.

The Spending Review includes a new £4bn cross-departmental levelling-up fund for England (that will attract up to £0.8 billion funding for Scotland, Wales and Northern Ireland). This will invest in:

  • Local infrastructure that has a visible impact on people and their communities and will support economic recovery
  • A broad range of high value local projects, up to £20 million, including regenerating eyesores, upgrading town centres and community infrastructure, and local arts and culture.

It will be open to all local areas in England and will prioritise bids to drive growth and regeneration in places in need, those facing particular challenges, and areas that have received less government investment in recent years.  The SR20 makes up to £600 million available in 2021‑22. The government will publish a prospectus for the fund and launch the first round of competitions in the New Year.

What does it mean for the Department of Culture, Media and Sport?

The Department for Culture, Media and Sport has successfully argued for an uplift of around 5.2% (counting capital and core resource funding). This is a real achievement by our civil service and ministerial colleagues – and a testament to the lobbying from Arts Councils and other arms-length bodies.

The DCMS will now allocate a settlement to these bodies, and it is to be hoped that we can start to see some of the new investment into the Arts Council’s published 10 year strategy: Let’s Create.

The Spending Review also allocates some specific funding:

  • Over £150 million to continue to strengthen our cultural and heritage infrastructure, including through the Cultural Investment Fund and Museums Infrastructure Fund, enabling the development of British Library North and continued investment in the Heritage High Streets programme
  • More than £100 million of capital investment
  • Over £320 million for our internationally renowned galleries and museums
  • Morer than £150 million in 2021-22 for upcoming major events, including the 2022 Commonwealth Games in Birmingham, Festival UK, and the celebrations for the Queen’s Jubilee
  • Almost £100 million to deliver the National Citizen Service (NCS) and invest in youth facilities. The government will review its programmes to support youth services, including the NCS, in the spring.

Interestingly, the Spending Review document also includes some published priorities for the Department, which give us a good indication on where any future spend might be directed. These priorities are:

  • Increase economic growth and productivity through improved digital connectivity 
  • Grow and evolve our sectors domestically and globally, in particular those sectors most affected by Covid-19, including culture, sport, civil society, and the creative industries
  • Increase growth through expanding the use of data and digital technology and increasing innovation, while minimising digital harms to the UK’s economic security and society
  • Enhance the cohesiveness of our communities and nations, including through major events and ceremonial occasions, and reduce inequalities of participation in society, particularly among young people.

What does the Spending Review mean for learning?

There is more funding allocated for schools next year, with the government stating that it is investing an extra £2.2bn next year. There is also money for Further Education, Lifelong Learning, and some changes to the way employers access funding for Apprenticeships. However, this investment is coupled with a public sector pay freeze that sees the majority of teachers without any pay increase. There is also no funding to reimburse schools for their COVID-19 adjustments, their pivot to online learning, or for their rising supply teacher costs as quarantine restrictions take their toll on the workforce. Teaching unions have been unilaterally clear that the funding falls short of what is needed. Geoff Barton from the Association of School and College Leaders said:

‘We are deeply disappointed that the government intends to impose a public sector pay freeze on teachers and are hugely concerned that this will damage staff retention. We understand the public spending pressures caused by Covid, but this decision comes on top of a decade of pay austerity. Experienced teachers and school leaders have already seen a real-terms decrease in their pay of 13 per cent over the past 10 years. This new pay freeze will result in the further erosion of their pay following a year in which they have worked tirelessly and under extraordinary pressure because of the Covid pandemic. The government asks more and more of teachers and leaders, and then effectively cuts their pay. It should not be surprised if staff decide to leave the profession.

We are pleased the Chancellor has confirmed that the additional investment in schools through to 2023 remains on track following years of real-terms cuts. However, any uplift in school funding is being wiped out by the huge cost of Covid safety measures and teacher supply cover which the government refuses to reimburse. Many schools will be significantly worse off as a result of these additional costs and it is likely that they will have to make further cuts.’

Funding for jobs and retraining is as follows:

  • A new 3-year long £2.9 billion Restart programme to provide intensive support to over 1 million unemployed people and help them find work
  • Work search support measures announced in the Plan for Jobs. This includes the Job Entry: Targeted Support, Job Finding Support, the Youth Offer, and Sector-Based Work Academy Programme placements. It also provides additional funding to build on the commitment to double the number of work coaches
  • The £2 billion Kickstart Scheme to create 250,000 new, fully-subsidised jobs for young people across the country.

And Local Authorities?

As with schools, there is core funding for local authorities in this Spending Review. LAs have also been given permission to raise Council Tax and to charge more through their social care precepts. However, as this statement from the LGA shows, experts do not believe that funding will be enough, especially as the economic crisis, as forecast by the Office for Budget Responsibility, comes to pass.

What else should we take note of?

Interestingly, this Spending Review and its levelling up priorities have been embedded in the government’s Green Book – the framework that all government uses to evaluate and appraise policies, projects and programmes. It gives the priorities published for departments more weight, and could have a significant impact on the way funding is distributed in the future.

So what does this mean for Cultural Learning?

The short answer is we do not know yet.

Previously when schools have been under financial as well as accountability pressures, which prioritise EBacc subjects over arts, arts subjects have suffered. Schools making difficult decisions about what to fund pick subjects that ensure more points in tables – however during Covid teaching colleagues have been vocal about the importance of arts for children’s wellbeing.

The Arts Premium was slated in March to be funded to the tune of £90 million. With Covid pressures on budgets we are concerned the £90 million could be redirected, but we have been told that the Department for Education continues to include the Arts Premium in its budgets, and it is a 2019 Conservative Manifesto commitment.

We do know it is important that we continue to advocate for the value of arts education for our children to support their education, future employability and wellbeing. We need to support schools and our teaching colleagues to make decisions about arts provision with information about their value and case studies about delivery during Covid-19.

We need to continue to push for support for arts education freelancers and for arts organisations to retain education roles. To that end the CLA is running surveys about the workforce in December 2020, and in April and July 2021, so that we can build a clear picture about the impact of Covid on the arts education workforce and be ready to lobby for the support our sector needs. Read more about our surveys and please do participate.