The UK Government Spending Review 2015

December 8, 2015

The UK Government’s Spending Review, published on 25 November 2015, sets out how funding will be split across government departments over the next five years.

In addition to the main announcements and headline-grabbing statements, the Review is accompanied by a plethora of supporting statements, data, and results of consultations. Graham-Pelton have set out below the principal points in the statement that we believe may impact or be of concern to our clients.

The Government Spending Review includes a number of announcements that have already been made and leaves unanswered many issues. For example, there are a number of specific announcements on university funding and a specific announcement on the cuts to BIS, but the real impact of these to Universities won’t be known until HEFCE receives its annual funding letter from BIS.

The overall trend across government departmental budgets continues to be cuts, although perhaps not as severe as feared.

  • As expected, the budgets for BIS and for the Charity Commission are both being cut. These cuts will run through the system and have an as yet unquantifiable impact on charities and higher education.
  • The apprenticeship scheme expansion is to be funded by a 0.5% levy on payroll for large organisations including charities (with payroll of more than £3m a year), which will put further strain on budgets.
  • The charity sector benefits from an 80% relief for business rates, and the fact that there was no specific mention of maintaining this in the Review creates uncertainty, as there is a wider review of business rates due in the next budget.
  • Of particular importance to the fundraising sector is that the Government will be calling for evidence in December for its previously announced review of the Gift Aid Small Donations Scheme.

Charity Sector

  • Perhaps the most positive statement for the charity sector was that funding will be maintained for the arts, national museums, and galleries (although this will still represent real terms cuts).
  • The pilot scheme for increased operational and financial freedoms for national museums will be made permanent and extended to museums funded by the Ministry of Defence.  The scheme has enabled national museums to better raise and spend their own funds, encourage philanthropy, and cope with the impact of funding cuts.
  • There are some very specific funding allocations attached to announcements on the Northern Powerhouse (e.g. Manchester Museum), the VAT from sales of sanitary products (affecting a range of women’s charities), and £25m of banking fines (affecting a range of military charities).

There are also a range of capital investments in culture across the country including:

  • £78 million capital funding in the Factory Manchester, plus £9 million per year in revenue funding from 2018-19.
  • £2.5 million in the Museum of Science and Industry in Manchester.
  • £4 million in Birmingham Dance Hub.
  • £500,000 towards plans to celebrate the 400th anniversary of the Mayflower in Plymouth in 2020.
  • £150 million to provide new world class museum storage facilities to replace Blythe House in London.

Other relevant announcements for the sector included:

  • The Government will expand the National Citizen Service programme for young people to 300,000 places by 2019/2020, but there was no mention of the cost of this programme.
  • To encourage museums and galleries to develop creative new exhibitions and display their collections to a wide audience, the government will explore with the sector the case for introducing a new tax relief for museums and galleries.
  • The government is also inviting the British Library to develop a business case for a print collections management hub in Boston Spa, Wetherby.

Higher Education

  • The teaching grant will be reduced (although high costs subjects will be protected), but there was better news on research funding.
  • There will be further challenges to Universities to ensuring they can recruit students from disadvantaged backgrounds, with the student opportunity fund reducing and freezing the threshold on repayments on student loans (which enables the Treasury to assume a higher level of repayment).
  • There was welcome news with the introduction of a loan system for Masters (including raising the age limit to 60), recognition of the decline in the number of part-time students through introducing maintenance loans, and widening of the eligibility criteria for tuition loans for students wishing to do a second degree in STEM subjects.
  • There was positive support in the statement for strong growth in overseas students, but no specific associated measures.

The chancellor has committed to protect science funding in real terms, and the government has also confirmed its commitment to invest £6.9 billion up to 2021 in research capital. Specifically mentioned were:

  • A new £1.5 billion Global Challenges fund to ensure UK science takes the lead in addressing the problems faced by developing countries.
  • £5 billion invested in health research and development, as well as up to £150 million to launch a Dementia Institute and a new £1 billion Ross Fund, partnered by the Bill and Melinda Gates Foundation.
  • A Global Antimicrobial Resistance Innovation fund, to be launched in partnership with China.
  • £250 million for the 100,000 Genomes Project to introduce whole genome sequencing technology in the NHS.
  • £75 million to unlock a £300 million investment to transform the University of Cambridge’s Cavendish Laboratories.

As expected, the chancellor will implement the Nurse review and introduce a new overarching body over the seven research councils, and Innovate UK will be brought into this new Research UK umbrella body. In addition, government will initiate a review of the Research Excellence Framework in order, it says, to examine how to simplify and strengthen funding.

More information, including the full Spending Review and Autumn Statement, can be found here.

Graham-Pelton would be pleased to advise our clients more specifically on the impact of the Government Spending Review. For more information, contact 0207 060 2622, or [email protected].

-Melvyn Keen, Associate

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