One possible response to the budget is that it doesn't match the ‘mood music’ the cultural and community sectors were hearing from government earlier in the summer (see this earlier blog), which seemed to be very supportive of the role of both sectors in building a better society. Some of the developments described below seem to run counter to this. A recent podcast from NEF characterised the budget as pleasing no-one in an effort to please everyone. But it's not a simple situation. A few areas of possible interest to people working in creative health are outlined below.
1. More money for public services
A large increase in spending is planned for 2025/6 across all public services, funded by an increase in taxes.
Total health spending will increase by 3.8% a year on average in real terms between 2023/24 and 2025/26. This includes a 3.4% increase to day-to-day (resource) spending on items like staff salaries and medicines, and a 10.9% increase in capital investment on items like buildings and equipment.
Local authorities will see an increase of 3.2% real terms to their core spending in 2024/5. After this (beyond 25/6) things grow more slowly, but from a larger base. This may have a positive impact on the creative health sector – which receives a significant proportion of its funding from local authorities; but this is coming in a context of many years of austerity so there is a sense of the funding plugging existing gaps rather than offering new possibilities.
The budget doesn’t address underlying issues (for example the need for reforms in adult social care) but it’s possible the spending review in the spring might tackle some of these.
£1billion more has been allocated for SEND spending in 25/6; but this will only maintain the status quo – no reforms or substantial increases are being discussed at this point.
You can read much more detail about spending on local authorities and the NHS in this King's Fund blog.
2. Raised Employers’ National Insurance Contributions (NICs)
From April 2025, employers will pay NICs on an employee’s earnings above £5,000 at the rate of 15%. (Currently, employers pay secondary class 1 NIC at the rate of 13.8% on earnings above £9,100 per year/£175 per week.) The employment allowance will be increased from £5,000 to £10,500 per year to help smaller businesses. It's estimated that it will generate additional revenue for the government of £25bn per year.
This will impact small organisations with tight budgets and lower paid staff. (Since this disincentivises employing people in small organisations it’s possible this will lead to an increase in freelance contracts). It is really worth noting the increase in Employment Allowance, however, which may make a big difference to mitigating the increase for small organisations.
Arts Council England is circulating a survey for NPOs (and IPSOs) to complete to describe the impacts of the budget here. The Charity Finance Group (CFG) is also circulating a survey for charities to complete here.
The National Council for Voluntary Organisations (NCVO) has written an open letter to government about the impacts. You can sign this letter if you would like to via this link.
“Ahead of the budget, we have been clear that charities are in a dire situation as they try and meet the demands of rising need in communities while their own costs escalate and funding declines. The decision to increase employer National Insurance Contributions (NICs) - and not to carve out an exemption for them - will place another major strain on charities at a time when we are already struggling.”
Together, NCVO, the Association of the Chief Executives of Voluntary Organisations (ACEVO) and the Charity Finance Group (CFG) are advocating to government to change this situation.
The National Council for Voluntary Organisations (NCVO) is also setting out its thoughts about a “new covenant” for work between government and civil society – you can contribute to that here.
3. What money is the Department for Culture, Media and Sport (DCMS) getting?
The detail for money going to DCMS is only set up to the end of 25/6 at the moment.
There will be an overall uplift of 2.6% in real terms. This is meant to cover both day-to-day (core) costs and capital projects (building/s and longer-term infrastructure). But the rise in capital spending will take up most of this, leaving what’s effectively a real terms cut in day-to-day costs.
Grant in aid to National Museums and Galleries will grow by 2.6% in real terms between 2023/4 and 2025/6. There will also be new funding – distributed via the arms’ length bodies – for capital programmes that might support the collapsing physical infrastructure in the sector. See here for more on this.
This doesn’t tackle the emergency developing across the museums sector with many smaller museums on the brink of insolvency. Museums bodies are continuing to lobby for more support here. The rises in minimum wage may also have an impact on smaller museums, in particular smaller independent museums.
4. What about levelling up?
The government is considering cancelling the £100m earmarked by the previous chancellor Jeremy Hunt for levelling up. The Shared Prosperity Fund (replacing EU funding) will be wound down too. This may be part of the switch the government wants to make away from competitive budding in local authorities to more stable long-term funding (see this previous blog).
5. Creative Industries Tax Reliefs
Expanded under the previous government, these will continue. They primarily relate to film, TV, concerts and exhibitions – and will likely not have a large impact in creative health.
Update (20 Nov) The Museums Journal has reported on a debate in the House of Lords over the impact of the budget on culture; it reports for example that Crossbench peer Lord Clancarty said that
“the danger for the arts of economic growth being so central to the government’s plan is that more high-profile commercialised creative industries and institutions get support while other of the arts and related cultural areas, particularly in the regions […] get neglected”.
You can also read more about the budget's impacts via the Campaign for the Arts here.