Spending Review and Autumn Statement 2015

The challenge every Chancellor faces is finding the right balance between wise management of the economy and meeting the expectations of the voters.

In 2010, George Osborne took charge of the economy with an unsustainable national debt and budget deficit.

He promised to eliminate the latter by 2015 but failed because the tax rates and cuts in public spending to do this were harsher than the voters would accept.

After May’s election, he repeated his promise to eliminate the deficit, now by 2019 and this once again would require major cuts in public spending, including £12 billion from the welfare budget.

Inevitably, the Opposition attacked his plan to cut the tax credits that are crucial for the poorest, even if they are in work.

On Wednesday 25^th November 2015, he prudently cancelled that plan until tax credits are phased out with the nationwide implementation of the Universal Benefit, expected to be by 2020.

In his Autumn Statement he also responded to voter expectations by allocating an additional £10 billion per year to the NHS; scrapping any further cuts to police budgets, as well as protecting the defence, overseas aid and education budgets.

All this was possible because other Whitehall departments took heavy hits to their budgets.

More important, was the apparently ‘surprise discovery’ that increased tax revenues and lower than expected interest payments on Government borrowing gave him £27 billion more to disperse than expected, in his March budget.

All this thrilled his backbenchers and won Osborne a good press but it did not impress the Shadow Chancellor who claimed credit for the U turn on tax credit cuts and complained that 14,000 of those already receiving the Universal Credit would still suffer the full cut.

He accused Osborne of ‘incompetence and poor judgement’, but blunted his attack by quoting Mao’s ‘Little Red Book’ and by giving the Chancellor his own signed copy, to the embarrassment of Labour MPs.

Nevertheless, there are serious questions Osborne must face.

How real is the £27 billion pot the Office for Budget Responsibility has fortuitously found?

If tax receipts don’t increase and interest payments do not remain as modest as they expect, the 2019 target could be missed like the 2015 target.

Underlying the Chancellor’s plans is an assumption that the British economy will continue to grow robustly, but productivity is still poor and our major Eurozone markets remain weak.

Household debt is still too high and interest rates may need to be raised to cool consumer demand and If, as Osborne has repeatedly claimed, ‘we are all in this together’, delaying the end of tax credits is welcome from a social justice perspective, but questionable if he is gambling with the nation’s finances in his bid to be Cameron’s heir apparent.

Another question is how the costs of providing for the 20,000 refugees the Government is committed to accepting, will be met; there was no mention of this in the Statement.

The tension between what we citizens expect and wise economic policies, is one Christians should understand.

We will experience personally it as the tension between self-interest and loving our needier neighbours, James 2:14-16 comes to mind.

Caring for an ageing population.

Britain has an ageing population and the proportion of people aged 65 or over increased from 15% in 1985 to 17% in 2010.

It is projected to reach 23% of the total population by 2035 and this represents political as well as human challenges

More than half of the UK welfare budget is spent funding pensions, healthcare and other benefits for our senior citizens and this expenditure is expected to rise by £2.8 billion a year over the next five years, reaching a total of £128 billion by the end of this Parliament.

Typically, older people need health and social care more than younger people, and it has been estimated that they consume 70% of that budget.

At a time when the Government is trying to eliminate the budget deficit it inherited, whilst simultaneously protecting the defence, NHS and overseas aid budgets, these statistics are seriously challenging.

This is exacerbated by the fall in tax revenues when older people retire from employment.

On Wednesday 25th November 2015, the Chancellor George Osborne will announce the Autumn Spending Review.

How can he handle these challenges, bearing in mind that the treatment of older people is politically sensitive and a higher proportion of them vote than younger people?

One option is to means test selected benefits and care services so that the better off pay more for them.

Another would be to raise the age at which the state pension is paid; whilst encouraging younger people to save more for their retirement.

One reason for an ageing population is that people live longer as the result of better preventative health care.

Raising the pension age could encourage more to delay retirement, helping to reduce public expenditure and defer cuts in tax revenues.

It would be wrong, though, to see this issue solely in financial terms.

There are other human and social aspects that should not be overlooked.

A recent report entitled 'Agenda for Later Life 2015' from Age UK reveals that loneliness is experienced by an increasing number of older people.

Marriage breakdown is more widespread and families are more geographically scattered whilst younger couples may both need to work, leaving less time to care for dependent relatives.

In some instances, these trends weaken the possibilities of family support for their elderly members.

Winter weather is another complicating factor when pensioners try to save by not heating their homes to keep the bills down, the combination of loneliness and self-neglect can lead to depression as well as mental illness.

Challenging us all to be good neighbours, Professor Willett, NHS England’s Director of Acute Care, says

‘The fact that a third of elderly people never or only occasionally socialise with family or friends is not only a sad indictment of the society we live in, but the results of that social isolation present one of the biggest challenges to the NHS over the winter.’

He suggests we can all look out for our elderly neighbours, offering to help with shopping or by taking them to the shops.

We can collect medications for them from the pharmacy and help them with home tasks they cannot handle.

From Jesus’ perspective, loving our neighbours comes second only to loving God.

It is also a way of sharing our faith and being different from the self- orientated individualism that dominates contemporary British culture.