analysis of the 2010 budget 2010 03

© URBAN FORUM

Given a distinct lack of wriggle-room given the state of the public finance, the budget probably offered more for the third sector than we might have reasonably expected.

As ever with these things, the devil is in the detail and most of the measures that should be good news for civil society, could soon turn to dust with poor management. However that was always going to be the case and the alternative would have been fewer announcements that at least have real potential to be good!

Banks were very much in the spotlight, and the Chancellor spoke of the need to reduce the risk that they posed to the State and of the need for systemic reform to avoid going back to business as usual. Much of the emphasis was on internationally agreed measures (including support for a global Tobin Tax) but there were some positive moves on all the Better Banking campaign's proposals, including a headline-grabbing commitment to ‘bank accounts for all'. Of more significance was a commitment to find ways of getting banks to invest in community-finance institutions and to serve poor communities better - either through regulation such as a Community Reinvestment Act, or a tax, such as the 1% levy we've proposed. Strong grounds for optimism, but of course it will depend on the incoming government's commitment to follow through on this.

Support for small businesses featured fairly prominently in the Budget and there were a package of measures designed to help SMEs through the worst effects of the recession. These include setting up a new ‘Finance for Growth' corporation to oversee £4bn of support for businesses and commitments from bailed out banks
RBS and Lloyds to lend nearly £100bn (at least half to small businesses). And there was a commitment was made to increase government contracts that go to SMEs by 15%.

Though the vast majority of the third sector will fall into the ‘small to medium enterprise' category, we've seen before that generic business support can fail to meet civil society needs. But if the support is not so blunt and poorly delivered to accommodate the needs of the third sector (Business Link anyone?) then this is good news.

Low carbon industry was given a boost with £2bn to support the green economy, through a new Green Investment Bank. £2bn is just a drop in the ocean to what's needed to have a real impact on our infrastructure, but in the context of spending cuts, it's a great start. The long awaited Social Investment Wholesale Bank - funded through ‘dormant accounts' - moved a step closer, but with only £75m of capital it's likely to struggle to have a major impact too.

There were endorsements for the Total Place and the Social Impact Bond pilots as the public sector desperately tries to find ways to respond to the twin demands of improved efficiency and tightening spending. (Although many commentators suggest these are in fact the same thing, the government is keen to emphasise that efficiency is not a by-word for cuts!).

Among the other interesting announcements in the Budget were; the British Waterways Board - who manage our canals - will be turned into a charity and a-third of London based civil service jobs will go (but over a 10 year period!). Despite signals in advance that there might have been something in the Budget on a Post Office (or ‘People's') Bank, what we actually got was news that a response to the recent consultation will follow shortly.

All the major Departments announced further efficiency savings, the most eyebrow-raising is probably the Department of Health suggesting over £500m can be saved by reducing costs arising from staff absence through sickness! And apparently the government will save £650m from reduced spending on consultants and marketing.

All in all, the Budget offers some real signs of progress on key policy areas of concern to Urban Forum and our members; financial inclusion, social investment, the green economy and government reform. The real tests are, however, still to come when a new government (of whichever hue) will need to set out detailed plans for spending cuts. Then we'll see how much of these promising ideas are followed through and which fall by the wayside.

Toby Blume
25th March 2010