From education to housing; jobs and salaries to taxes, the Women’s Budget Group analyses the 2018 Autumn Budget and its impact on women
The 2018 Autumn Budget was supposed to be the Budget that ended austerity.
There was confirmation of welcome additional money for the NHS and more money for Universal Credit, which will benefit women as the majority of those using and working in the NHS and the majority of those who need social security.
However, as our analysis shows, other public services remain chronically underfunded, and the social security system is still facing large cuts. For those hit hardest by cuts to spending on public services and social security the Chancellor’s speech promised ‘jam tomorrow’ with little real change to improve their lives today. With future spending plans dependent on a ‘good’ Brexit deal even that promise may not be realised.
The key findings of our analysis are:
Economic and fiscal outlook
Public sector borrowing is forecast to fall and the target of a budget surplus in middle of next decade has been abandoned, but austerity not really ended. The OBR forecast that growth in GDP per capita would be around 1 per cent a year over the next four years, assuming a smooth and orderly Brexit by next March, which is by no means certain. Even if there is an orderly Brexit, average earnings are not projected to recover to their pre-crisis level in the next five years, and average incomes per person
will barely rise.
Equality impact assessments
As in previous years, the Treasury has failed to present a full equality impact assessment of Budget policies. There is no equality assessment of the cumulative impact of the measures in the Budget by any of the protected characteristics in the Equality Act 2010. A few equality impact assessments were produced, including the Tax Information and Impact Notes produced by HMRC. However, these continue to be insufficient, as they do not include how many men and women are in each category
nor how much will each group benefit. There was no intersectional analysis by more than one protected characteristic.
Employment and Pay
The Budget failed to address the on-going problem of stagnation in wages, with average weekly wages still £11 lower than pre-2010 crisis. The National Living Wage is raised to £8.21 per hour from April 2019. This is welcome but still falls short of the real Living Wage of £9.00 (£10.55 in London) for 2018/19. The 1% pay cap for the public sector was removed but, aside from those on the NHS, no additional money was provided for public sector wages. Women and people from ethnic minorities
have been disproportionately impacted by cuts to public sector pay over the last year as they are more likely to work in the public sector.
The Budget included a series of tax giveaways totalling more than £3bn a year, including raises in the Personal Tax Allowance and the Higher Rate Threshold, fuel duty freeze, and cuts to some alcohol duties. These giveaways benefit mostly men, who are more likely to be higher earners, drive a car and consume alcohol. As the Women’s Budget Group has repeatedly argued, raising income tax thresholds does not help the low-paid, who are disproportionately women.
The budget included a series of measures to help with the transition to UC and a welcome £1,000 increase in the work allowance in universal Credit for families with children and disabled people with limited capability to work, though not for childless people, whose work allowance remains cut to zero. This only partly restores the previous levels (it does for tenants but not for owner-occupiers or for childless people) as the £1.7bn spending makes only half good the previous cut announced in the
July 2017 Budget. Overall the measures announced in this Budget, although making UC slightly more generous, do not begin to reverse the drastic cuts to social security benefits and tax credits since 2010, estimated at more than £35bn per year by the early 2020s and impacting predominantly on women.
The Budget was a missed opportunity to address pensions inequality and help those older women pushed into poverty through the raising of the State Pension Age. Tax reliefs on pensions total £41 billion, and 40% of this goes to the top 10% of those claiming relief (earning £70,000 a year or more). The current pension system fails to recognise women’s unpaid work in caring for children, the frail and the elderly.
The additional £650m for social care is welcome but is insufficient to make up for the chronic underfunding of social care services, as the funding gap for social care is estimated to be £1.5bn in 2019/20. Welcome increases in the minimum wage and living wage rates will have to be met by already overstretched local authority budgets. Despite the Chancellor claiming this was a Budget for ‘the strivers, the grafters and the carers’, there was nothing in the budget for the 6.6 million unpaid carers.
The Budget confirmed a welcome additional real-term spending of £20.5bn for the NHS announced in the summer. However, this falls short of the amount needed to compensate for years of underfunding. Mental health will also enjoy an additional £2bn. With most of this yet to be allocated, it is important that money is invested in community services and support which prevent people reaching crisis point. Other spending on health including money for doctor and nurse training and education,
and public health, will fall £1bn in real terms. This is problematic in a context of severe skills shortage in nursing.
The budget included a retrospective payment to extend the transition period from childcare vouchers to tax-free childcare, after the Government took the decision to keep the former scheme open to new entrants for an additional 6 months (to October 2018) There was no mention of other changes to childcare policy. This silence comes at the time when the sector faces significant funding issues and current policy fails to meet the needs of many parents.
The Budget included an additional £400m to schools for equipment and facilities, but this will do little to counteract the 8% fall (around £5bn) in spending on schools in real terms between 2009/10 and 2017/18. No money was allocated for spending on staff, nor to enact the recommendations of a report by the Women and Equalities Committee of the House of Commons on sexual harassment in schools, of which girls are disproportionately targeted. Contrary to what had been flagged as a
possibility prior to the Budget, the Chancellor missed the opportunity to remove the tax relief privileges held by some of the most elite and expensive private schools in England.
The decision to reinstate entitlement to housing support for the 18-21 year olds is welcome. The budget did nothing for households in which women make up the majority: households accepted as statutorily homeless (67% of adults), those claiming housing benefit (60%) and social renters (55%). The announcement of the extension of the Help to Buy scheme reflects the government’s support for home owners over renters within the reduced budget.
The Budget included announcements (and re-announcements) of billions in major commuter rail projects, including an additional £770 million for improving transport infrastructure in cities. There was also £420 million for repairing pot holes. It made no mention of funding for buses, which women are more likely than men to use, and despite almost three times as many public transport journeys being taken by bus than rail.
There was some welcome short-term funding for some local government services, but this falls short of what is needed in the long term. Local government has faced significant cuts to budgets since 2010 alongside rising demand for adult social care, children’s services and homelessness support services. This threatens many of the services that women rely on.
The Budget was silent again for the second year in a row on one of the gravest forms of inequality – violence against women and girls. The Government’s own Violence Against Women and Girls Strategy recognises the scale of the problem but this is not backed by enough funding for either victims’ services or preventive interventions to reduce the incidence of VAWG in the longer term. The previously committed central government funding of £20m a year cannot compensate for the cuts to funding for local government, which provide a significant proportion of funding for VAWG support.
The Women’s Budget Group scrutinises government policy from a gender perspective. We are a network of leading feminist economists, researchers, policy experts and campaigners committed to achieving a more gender equal future.