The Chancellor of the Exchequer, Philip Hammond, has unveiled the Government’s latest financial plans in the 2017 Autumn Budget. The Chancellor looked relaxed and confident despite headline economic figures which will have been very disappointing for the Government and which indicate that the economy is not as healthy as previously thought. The Office for Budget Responsibility (OBR) had previously assumed that Gross Domestic Product (GDP) would return to its pre-crisis trend of about 2% a year but this has now been revised downwards and the OBR now forecasts that GDP will grow by only 1.5% in 2017, by 1.4% in 2018, 1.3% in both 2019 and 2020, before picking back up to 1.5% in 2021, and finally 1.6% in 2022.
This outlook does not provide the Chancellor with very much leeway and in order to provide for the spending commitments set out in the Budget, he has needed to loosen his grip on borrowing.
The Chancellor confirmed that in addition to the £700 million already invested in Brexit preparations a further £3 billion would be set aside over the next two years.
For the NHS there were a number of commitments, including:
- £2.8 billion of additional resource funding to the NHS in England, comprised of £335 million to the end of 2017, £1.6 billion in 2018-19, and £900 million in 2019-20. This funding brings the expectation that A&E four-hour target will be made and that there will be a reduction of waiting lists.
- £2.6 billion to support the Sustainability and Transformation Partnerships, £700 million for individual trust turnaround plans for those facing the biggest challenges and £200 million for efficiency programmes such as those reducing energy or implementing new technologies that allow money and staff to be directed towards treating patients.
- £3.5 billion of capital investment in estates transformation, increasing proceeds from selling surplus land.
- The Government will fund pay awards as part of a pay deal for NHS staff – the amount of funding will be determined by the deal.
- There was no mention from the Chancellor of social care.
However, despite NHS England Chief Executive Simon Stephens’ unprecedented call for the Government to honour the Brexit campaign’s pledge that leaving the EU would mean more money for the health service, the money pledged falls significantly short of the £4 billion that The Health Foundation, The King’s Fund and the Nuffield Trust calculate is required next year to prevent patient care from deteriorating.
On life sciences more generally, the Chancellor announced that there would be a further £2.3 billion for investment in R&D and that the main R&D tax credit will be increased to 12% which might help achieve the ambition set out in the Industrial Strategy to drive up R&D investment across the economy to 2.4% of GDP.
The Budget set out politically necessary concessions on the delivery of Universal Credit and a number of measures to reduce the pressures on the housing market and to increase the availability of affordable housing.
The surprise announcement was the immediate abolition of stamp duty for first-time buyer purchases up to £300,000 and on the first £300,000 of first-time buyer purchases of up to £500,000. The Government will no doubt be hoping that this measure at least many produce some positive headlines.