Published by Alexander Hitchcock on 17 June 2016
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1 July 2016
This week the three top credit-rating agencies downgraded the UK from a triple-A rating. They pronounced that weaker economic growth will reduce UK tax revenues, requiring tighter public spending and increased taxes.
Amy Finch, Research Manager and Head of Education
The National Audit Office which, on Wednesday, reported that the Government’s £10 billion regulatory reduction target was “open to manipulation and may not reflect a realistic business-centred view of regulatory costs” − a point that Reform made in the report How to run a country: the burden of regulation.
On Thursday, the Office for National Statistics reported that real household disposable income rose by 4.8 per cent in the first quarter of 2016 compared with the same quarter a year ago.
Also on Thursday, NatCen’s British Social Attitudes survey reported that the public’s satisfaction with the NHS fell slightly between 2014 and 2015, but still remained high in relation to the last decade of surveys.
Also on Thursday, the Department for Education published official statistics showing the number of teaching assistants had increased by 20 per cent over the last five years, despite evidence that they are a high-cost, low-effective strategy for improving education.
On Tuesday, Ofsted reported that one quarter of children’s social care services are ‘inadequate’, and over half are ‘requiring improvement’, remarking that deprivation is neither a cause nor excuse for failure.
On Thursday, it was reported that the decision on whether to expand airport capacity in the south east will be delayed until “at least October”, adding to concerns that time and cost pressures will reduce the scope and economic benefits of High Speed 2.
Today, the Chancellor announced that he may abandon his target of reaching a budget surplus by 2019-20, in light of the vote to leave the European Union.
“The UK vote to leave the European Union in the referendum on 23 June will have a negative impact on the UK economy, public finances and political continuity…
Fitch believes that uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth, as businesses defer investment and consider changes to the legal and regulatory environment… Medium-term growth will also likely be weaker due to less favourable terms for exports to the EU, lower immigration and a reduction in foreign direct investment…
Weaker economic growth will adversely affect tax revenue and the budget deficit and require the government to implement additional fiscal consolidation measures to prevent it missing its fiscal targets.”
Fitch Ratings, in a press release on Monday.
“In my view, and I am not pre-judging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”
Mark Carney, Governor of the Bank of England, in a speech on Thursday.
“The government must provide fiscal credibility so we will continue to be tough on the deficit but we must be realistic about achieving a surplus by the end of this decade. This is precisely the flexibility that our rules provide for.”
Rt Hon George Osborne MP, Chancellor of the Exchequer, in a speech in Manchester today.
On Monday, Kirsty McHugh, Chief Executive of the Employment Related Services Association, wrote a blog arguing that the Work Programme has been successful overall, but that the employment provision set to start in 2017 appears to be a move away from public service reform.
On Tuesday, Andrew Haldenby, Director at Reform, wrote a blog arguing that Brexit could result in lower spending on the NHS, contrary to the intentions of the Leave campaign.
On Wednesday, Amy Finch, Research Manager and Head of Education at Reform, spoke at the EdExec LIVE conference to present early findings from Reform’s survey of multi-academy trusts.