Demos Responds to the Autumn Statement & Comprehensive Spending Review

Welfare and Pensions

If the Treasury was already nervous about Universal Credit, it will be even more preoccupied now. In the medium term, a large portion of the promised savings to the welfare budget depend upon it. For example, the Chancellor’s welcome decision to shelve plans to cut tax credits will protect working families now, at the expense of the Treasury; but over time, the plan is to move from tax credits (and other benefits) to Universal Credit – entitlements we know, from the Summer Budget, will be subject to cuts. So it is when families make the transition from one system to another that the real savings will be made.

Set alongside the Government’s National Living Wage, this strategy is perfectly in keeping with the Chancellor’s goal of a ‘high wage, low tax, low welfare’ society. The timing also works better for families – welfare entitlements will fall as (some) families benefit from rises in the Minimum or National Living Wage. But it does mean an awful a lot rests on the success of Universal Credit, and officials at the DWP can expect to hear a lot more from colleagues at the Treasury in the future.

The other welfare reform announced today was the promise to ‘extend the same support and conditionality we currently expect of those on JSA to over 1 million more benefit claimants’. The details of this are not yet clear but it may be that this refers to those on in the Work-Related Activity Group (WRAG) for disability benefits. This group are judged unfit to work, but capable of returning to work in the future. The government is already committed to aligning the entitlements that this group receive with the level of Job Seekers Allowance. Demos has argued that there is a case for aligning these entitlements, but the extension of conditionality for this group will need to be looked at very closely. Those in the WRAG group already have regular interviews with advisers and a punitive sanction regime for those not yet fit to work should be avoided.



Housing continues to shoot up the political agenda. The need to build is acute, so it is good to see the Chancellor taking the problem seriously with financial backing for measures targeting supply as well as demand.

However, earmarking funding for affordable housing is just one side of the equation. We also have to decide where all these homes are going to be built – and make sure it happens. The reality remains that there is no political will for large-scale development on green belt land, and brownfield sites can only ever be part of the solution. The Government needs to find a way to nurture public and political support for new housing developments at the local, as well as national level – an issue an upcoming Demos report will explore.

Moreover, Starter Homes will be unaffordable for many. The Government’s focus on home ownership does little for huge sections of the population where home ownership is simply not within reach for the foreseeable future. The extension of shared ownership and the promise of a small number of new homes for lower-than-market rent is welcome, but will be of little comfort for those on waiting lists for social housing.

Moreover, the Government’s continued focus on first time buyers threatens to obscure the needs of older people, many of whom are stuck in large family homes without viable retirement property to move in to. Demos has long called for housing policy which considers the needs of the whole of the housing ladder, not just those at the bottom, as a way of creating sustainable housing supply in line with demographic change.


Education and Skills

The recalculation of the pupil funding formula is a welcome move to restore fairness to the education system, and has been long overdue. It is important a sensible adjustment period is set, as school budgets remain under significant pressures. When considering education funding as a whole, however, it is worth noting that some of the schools that have benefited most from the discrepancies in funding – such as those in London – have also been performing most strongly over recent years. This reinforces the critical role that long-term investment in education plays in improving outcomes overall, particularly for children from disadvantaged backgrounds.

On vocational education, the apprenticeships levy, which transfers greater responsibility to businesses for delivering the quality training that will grow their workforce, is an extremely encouraging move. The protection of the adult skills budget is also a critical decision, given the strength of the economy is dependent on the dynamic skills of the entire workforce, and as technological change transforms the nature of many vocations, we must ensure that we can be more flexible to train and re-train workers to fill jobs where demand is growing. That said, concerns remain about funding to support ESOL provision, which our research showed has suffered over recent years from significantly larger reductions than the adult skills budget as a whole. Demos would encourage much greater investment in this area, given improving migrants’ language skills is fundamental to unlocking their potential in our labour market and supporting wider social goals.

Demos welcomes the expansion of the National Citizens Service – we strongly believe in the importance of ensuring all children have the opportunity to develop the non-academic skills so essential to their own career prospects, to our communities, and to businesses.


Health, Social Care, Communities

Despite improvements in job creation over recent years, the UK’s enormous levels of geographical inequality continues to underpin the poor functioning of adult social care as a market. Given this, the argument for enabling local authorities to raise additional tax revenue to fund social care based on local needs through a Social Care Precept make sense – though alone this will be unlikely to meet the scale of demand. We must also acknowledge the extreme pressure that local authority social care budgets are already under, and, as our Poverty in Perspective report argued, that any additional funding opportunities are tied to support encouraging strategic implementation and long-term planning. Moreover, given the growing number of people funding their own social care, the Government would be wise to accompany these changes with policies that promote and support people saving for costs in later life.

Demos has previously called on the Government to expedite the much-discussed move towards the integration of health and social care in our report exploring inequalities in end of life care. Our recent work focusing on groups often ‘invisible’ to policy-makers – including injured working-age veterans –  show many groups are still significantly more likely to fall through the gaps between the health and social care systems, and integration (if properly implemented) should go some way to preventing this from happening.

It is concerning to see public health budgets so vulnerable in the firing line – the prevention and early intervention activities they fund must be recognised as an integral part of the health system, given their reduction poses such a significant knock-on effect for the NHS’ costs and service pressures. As our study into youth alcohol consumption indicated, effective use of public health campaigns can encourage major improvements in health consciousness, but those most vulnerable to harmful behaviour would benefit from further investment at the earliest stages. The exposure of public health budgets is particularly worrying in the light of local authorities recently taking over responsibility (formerly held by the NHS) for the public health of children aged 0-5; our recent report on disabled children’s care noted that families were already keenly feeling the cuts to universal, local authority-provided services.


Devolution and Government Reform

The Chancellor has continued to invest in his devolution agenda and in the establishment of a ‘Northern Powerhouse’, confirming the scrapping of universal business rates and a ‘devolution revolution’ based on infrastructure investment and transferral of powers. These are positive and radical steps, which an organisation as focused as we are on empowering citizens and promoting social mobility can only welcome.

That said, despite the persuasive rhetoric, we must remember that these new powers sit in the context of an overall fall in local government budgets, and a significant fall in the DCLG’s budget. Moreover, in a context where it has never been more necessary for local governments to be able to plan effectively, to deliver services efficiently and to anticipate the long-term needs of their communities, we must recognise the impact that long-term funding restrictions of this scale could pose to their ability to attract and retain top public sector talent. Overall, there’s a long way to go yet before the Chancellor’s ambitions to drive regional prosperity can be truly squared with the realities of the funding environment.


Crime and Security

In the face of such pressing and unconventional challenges to our national security and global peace, the Government had little choice but to not only protect, but indeed strengthen investment in crime and terrorism prevention. Demos welcomes the Chancellor protecting police spending in real terms, and investing billions of funding in cyber-security. As the research of our Centre for the Analysis of Social Media has shown, our law enforcement agencies are currently facing a generational challenge. As with so many other parts of our lives, crime is rapidly moving online, and this investment will help them to develop the technologies and skills needed to protect our citizens from those increasingly harnessing digital platforms to challenge our national security.