Public Services > Central Government

Osborne outlines new era for education with 2016 Budget

Neil Merrett Published 16 March 2016

All English schools to become academies by end of decade as chancellor details aims for digital tax systems, business rate modernisation and devolved powers


Sweeping reforms to secondary and primary school education across England and further devolution of funding and powers nationally, including granting criminal justice functions to Manchester, form the key commitments in Chancellor George Osborne's 2016 Budget.

The education plans, alongside commitments to improve digital tax systems and "modernise" business rates, are among the most significant challenges facing the public sector as a result of the chancellor's plans.

By 2020, the government expects all schools to become academies or have orders in places to convert to this structure by no later than 2022, removing local government oversight of their operations.

As part of devolution commitments, the government said it would be looking to work with English local authorities over standardising business rate bills from April 2017 as part of a wider modernisation plan.

The strategy is intended to ensure ratepayers receive bills and make payments online from April 1 next year, while all billing and collection systems are expected to be linked to HM Revenue and Customs (HMRC) digital tax accounts by 2022.

However, the document suggests that HMRC may have had some issues with its IT systems, though 'making tax digital' apparently "remains on track".

On "HMRC digital", the Budget policy costings document says, "The Autumn Statement 2013 measure 'HMRC: extending online services' had two elements: putting inheritance tax (IHT) online for customers and agents and a new system allowing charities to register jointly with HMRC and the Charity Commission.

"The IHT element was originally expected to go live in October 2015, with full coverage from March 2016. We have been told that it will not be fully operational until March 2017. The charities element was due to be implemented from 2015-16, but this has been delayed to April 2017. The Autumn Statement 2014 measure announcing the capital gains tax digital calculator - part of the 'HMRC: operational measures' package - was scheduled for an August 2015 implementation date. HMRC has informed us that this is currently on track. The Autumn Statement 2015 measure 'making tax digital' also remains on track."

With a recent change in guard in several key commercial and procurement roles across government, questions had been raised over whether the chancellor may push ahead with significant shifts to current policy around sourcing, particularly in line with commitments to conduct a departmental spending review.

According to the Budget, the review is expected to deliver £3.5bn in additional savings from public spending during the 2019-20 fiscal year.

However, key procurement commitments in the budget involved looking at helping the public sector to drive competition through more open tender practices.

"The government wants to ensure the £60bn local authorities spend to procure services is done in an efficient and competitive way," said the budget.

"The government will consult on new rules requiring local authorities to be transparent about the cost of the inhouse services they provide, and whether there could be savings from using competitive external providers"

Discussing some of the government's ongoing commitment aims today, the chancellor boasted that the "devolution revolution was taking hold" and "the northern powerhouse is now a reality".

He pointed to a number of new proposals around devolved city deals as well granting the Greater London Authority, Liverpool City Region and Greater Manchester full retention of their business rates. These commitments will also apply to other ratified devolution deals going forward.

The GLA is expected to gain full retention of these rates from next April, in what is likely to be an increasingly significant income stream for authorities going forward.

Manchester, as part of its own devolution agreement, will meanwhile be given powers over criminal justice services, along with a new 'Life Chances Investment Fund'.

"The radical devolution of justice responsibilities will enable Greater Manchester to offer seamless interventions for offenders as they transition between prisons and the community, and to join up public services to tackle the causes of crime and prevent reoffending," said the budget document.

In healthcare, Kable research director Andrena Logue said there was very little new with regards to frontline services, with the exception of additional funding to support enhanced children's hospital care in Birmingham, Manchester, Sheffield and Southampton.

"This complements the wider public health initiative of a tax levy on manufacturers of high sugar drinks aimed at children, which in turn follows on from NHS England's recently announced joint initiative to build ten 'healthy new towns' which will also exclude fast food zones," she said. "Aside from this, Osborne's excitement on the 'devolution revolution' and support for the arrival of 5G could indirectly deliver gains for integrated care over the mid-term, but with funding from other sources."

In the case of Wales, the chancellor noted that recently signed £1.2bn city deal for the Cardiff Capital Region including commitments to bus and rail travel.

Negotiations would also commence around a Swansea Bay City Region Deal and packages for North Wales looking to strengthen the regional economy and connections to the government's Northern Powerhouse agenda.

City regions are also to be strengthened in Scotland under the current plans.

In the area of transport, commitments were announced for the High Speed 3 railway service between Leeds and Manchester, £161m will be invested to speed up transformation of the M62. In addition £75m will be used to improve northern road links such as the A66 and A69.

The government has also committed £10m to a new hub for data science and a centre for excellence in economic measurement as part of efforts to enable the Office for National Statistics to develop analytical and digital capabilities in economic measurement.

"The new hub for data science will maximise the public value of existing and new data sets - so called 'big data' from public and private sources - using cutting-edge techniques to allow the Office for National Statistics to produce more innovative, accurate and timely statistics," said the budget document.

Jessica Figueras, chief analyst for Kable, said the budget appeared to be more about "tweaks" to the plans set out in the two major Budgets of 2015 rather than fundamental changes.

"Some further cuts to departmental budgets have been pencilled in for 2019, giving Osborne space to back-track if needed, although announcement of departmental efficiency reviews will keep civil servants from breathing too loud a sigh of relief," she said.

Additional reporting by David Bicknell.

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