Ian Murray thanks the hard work of people behind the scenes who make the festivals a success
The Secretary of State for Scotland, Ian Murray, hosted a reception as the Edinburgh Festivals get underway this week.
The event, which was hosted in Queen Elizabeth House, the UK Government’s flagship building in Edinburgh, was attended by representatives from Edinburgh’s 11 Festivals. Scotland Office Minister Kirsty McNeill also attended.
There was a performance from Ryan Corbett, a classical accordionist from Glasgow.
The UK Government is supporting artists bringing work to the Fringe Festival through its ‘Keep it Fringe’ fund, an initiative launched in 2023. Supported by £1 million from the UK Government over two years (2024 and 2025), there are 180 recipients of £2,500 bursaries this year.
The UK Government is also helping to fund a central premises for the Edinburgh Fringe Society to house staff and provide a venue for visitors throughout the year.
Speaking at the event, Mr Murray said: “For three weeks in August, the city of Edinburgh becomes the global epicentre of culture as we welcome an explosion of creative energy. Artists and performers take to hundreds of stages all over the city to present shows for every taste.
“It is of course not only a cultural and social asset, but a huge contributor to our economy, generating around £360m and supporting around 7000 jobs each year. The creative industries are the fastest growing part of our economy and we should nourish and support this growth.
“They are all a key part of Brand Scotland, and I am determined the Edinburgh festivals form part of our plan to attract international investment to Scotland, so that they can be enjoyed by future generations.
“I would like to thank everyone involved in the festivals whose hard work helps make this success story possible.”
A fund to help victims of crime opens to applications for the fifth time today (1st August).
Organisations that support victims of crime will be able to bid for a share of more than £940,000 in the Victim Surcharge Fund to provide direct, practical help to victims.
Since its establishment in November 2019, 14 organisations have been awarded over £1.3 million from the fund which is financed by penalties imposed on offenders who receive a court fine.
The Victim Surcharge Fund annual report, which was published today, details that £477,451 was paid to nine organisations in 2023-24.
Justice Secretary Angela Constance said: “Our priority is putting the rights of the victim and their needs at the heart of the criminal justice system. It is only right that criminals should pay towards helping victims of crime recover from their experience.
“Too many people face financial hardship as a result of crime and this funding can help meet the costs of essential items including property repairs and installing alarms.
“The awards will also enhance the valuable work carried out by victim support organisations.”
The victim surcharge came into force in November 2019 and applies to those who commit an offence and are subsequently convicted and receive a court fine.
To date, the Victim Surcharge Fund has provided support to over 5,000 people with fourteen organisations sharing £1,322,437.
Victim’s organisations interested in applying to the fund can request an application form by emailing VictimSurchargefund@gov.scot and should apply by 12 September.
To date, the Victim Surcharge Fund has provided support to over 5,000 people with fourteen organisations sharing £1,322,437.
UK government will recruit more than 1,000 newly qualified GPs thanks to action to remove red tape
Government acts to fix front door to NHS and deliver more appointments
Slashing burdensome red tape to boost capacity in surgeries and hire over 1000 more newly-qualified doctors
Government listening to sector to help end scandal of patients struggling to see a doctor
More than 1,000 newly qualified GPs will be recruited thanks to government action to remove red tape currently preventing surgeries from hiring doctors.
Bringing back the family doctor is central to the Government’s plan to rebuild the health service, and the changes being made to cut through the current rules will help more patients get access to GPs, and ensure more GPs are able to find roles, so that people in communities across England will receive the timely care they deserve this year.
Currently, under a scheme known as the Additional Roles Reimbursement Scheme, primary care networks (PCNs) can claim reimbursement for the salaries (and some on costs) of 17 new roles within the multidisciplinary team – meaning more specialists are available to treat patients.
They are selected to meet the needs of the local population, but are currently prevented from using this to recruit additional GPs. The changes announced today means that newly qualified GPs can quickly be recruited into the NHS through this scheme in 2024-2025.
It’s thought hundreds of newly qualified GPs could be without a job this summer in England. But thanks to this intervention, they will be able to be hired by the end of the year.
The Government is listening to GPs, and this has been hard fought by the British Medical Association, Royal College of General Practitioners, and many other groups who petitioned for it, receiving over 11,000 signatures.
It comes as the Government accepts recommendations of the Pay Review Bodies in full, increasing GPs’ pay by 6% – their first meaningful pay rise in years.
Health and Social Care Secretary Wes Streeting said: “It is absurd that patients can’t book appointments while GPs can’t find work.This government is taking immediate action to put GPs to work, so patients can get the care they need.
“This is a first step, as we begin the long-term work of shifting the focus of healthcare out of hospitals and into the community, to fix the front door to the NHS.
“I want to work with GPs to rebuild our NHS, so it is there for all of us when we need it.”
Dr Amanda Doyle, National Director for Primary Care and Community Services, said: “With hard-working GP teams delivering millions more appointments a month compared to before the pandemic, it is vital they are given the resources to manage this increase in demand.
“Adding General Practitioners to the scheme is something that the profession has been calling for in recent months to make it easier for practices to hire more staff – so I welcome this measure which is an important first step to increasing GP employment in the long-term.
“We will continue to work with GPs, the BMA and the Government to avert any potential action but in the meantime the NHS has a duty to plan for any possible disruption to ensure services continue to be provided for patients – so the public should continue to come forward for care in the normal way if collective action does go ahead.”
This is an emergency measure for 2024-2025 to ensure patients are able to access GPs and GPs are able to find roles, while the Government works with the profession to identify longer term solutions to GP unemployment and general practice sustainability as part of the next fiscal event.
The Government will ensure the NHS has the funding it needs to deliver this, paid for by £82 million from the existing department budget.
In expanding general practice capacity, the Additional Roles Reimbursement Scheme improves access for patients, supports the delivery of new services and widens the range of offers available in primary care.
Scottish Lib Dem leader sees value of a local branch to prevent fraud and scams and build financial confidence
Corstorphine branch supports charities including their upstairs neighbours at Dean and Cauvin Young People’s Trust
Long-serving colleague’s retirement marked with gifts from local community
Alex Cole-Hamilton MSP, the leader of the Scottish Liberal Democrats, visited the Nationwide branch in Corstorphine to learn more about how important the branch is to its local community.
The MSP toured the branch and learned more about what branches do to tackle fraud and scams. Fraud has become more sophisticated, and branch staff often act as a last line of defence. In recent times Corstorphine branch staff have noticed spikes in attempted WhatsApp scams and cowboy tradespeople.
Nationwide has promised that everywhere it has a branch, it will still be there until at least 2026 – making sure that face-to-face service stays available on the high street. This policy has led to Nationwide becoming the biggest banking brand network on the high street, with more branches than any other provider across the UK.
Corstorphine’s branch supports a range of charities by acting as a collection point for the Kids Love Clothes clothing bank and with staff from the branch volunteering for Dean and Cauvin Young People’s Trust, which is located above the branch.
Nationwide offers all its staff two days a year of paid volunteering time, and in 2023 donated over £50,000 to the charity to support young people aged 16-26 who are in or leaving care.
Mr Cole-Hamilton also saw the Safe Space in the branch for people facing abuse, which forms part of an initiative Nationwide has introduced in over 400 branches across the UK. Branch staff at Corstorphine are able to offer a private space for someone to call friends, family, support charities or the police.
Customer representative, Lorraine Mudie, has worked for Nationwide for 42 years and met Mr. Cole-Hamilton a week before her retirement.
She said: “It was such an honour to welcome Alex Cole-Hamilton to our branch. I’m glad to be able to show how important the branch is to our local community here in Corstorphine.
“Some of our customers heard I was retiring and have been bringing in gifts and cards just to say thank you and goodbye – which I find really touching.”
Alex Cole-Hamilton MSP said: “At a time when most other banks are closing branches everywhere, it’s refreshing that Nationwide have decided to stick by their communities in this way.
“I know many of my constituents will be delighted to have the reassurance that their local branch will remain open.”
It ain’t pretty. But there’s also politics at play.
Rachel Reeves gave a statement to the House of Commons on what the government calls the “spending inheritance” (writes Fraser of Allander Institute’s JOAO SOUSA).
It’s important to make clear what this is and isn’t about. If you hear people saying that this is all to do with fiscal rules, that’s incorrect. We have highlighted many problems with them, but this statement is all to do with this year’s public finances, meaning 2024-25 – all the fiscal rules will apply to 2029-30, although there will be some knock-on effects into future years from these decisions.
Ultimately, this is only a partial fiscal statement – setting the scene for the Budget, the date of which has been announced for 30 October. It is a welcome return to normality in that there will be more than 10 weeks for the OBR to prepare its forecast.
The spending pressures and the ‘black hole’ – how does the Treasury calculate it?
Rachel Reeves said in her statement that pressures on public spending exceeded allocated funding by £35 billion. Some of this is additional spending from accepting the recommended pay awards from the Pay Review Boards in England, which are higher than the previous government had budgeted for.
Others come from areas like accommodation for asylum claimants, which the previous government had just assumed would come from the Home Office’s spending limit. Given that the Home Office’s total allocation is £21 billion, you can see why accommodating a pressure worth nearly a third the size of its envelope was not credible.
The Treasury had set aside £9 billion in reserve – a usual management practice for unforeseen circumstances during the course of the year, and which allows the government to plan in some budget cover for unspecified departments. This reduces spending pressures to £26 billion.
The Treasury also assumes that some of these pressures will either not materialise (they are pressures after all, not crystallised spending yet) or that some will be “managed away” – usually by playing hardball and forcing departments to find savings somewhere else.
Ever wondered why the Home Office keeps putting fees for anything to do with visas and passports? The Treasury allows them to deduct it against their budget (fees are classified in Estimates as “negative spending”, for the fiscal aficionados) and it’s the quid pro quo of accepting responsibility for the financial risk for spending pressures.
There are a few rounds of this over the course of the year, and by the time of Supplementary Estimates – usually mid-February – the Treasury and other departments essentially have a stare-down contest, which tends to end up with both sides conceding somewhat, and so the Treasury assumes something about its ability to do that – what is called ‘fallaway’ in the document. This amounts to £7.1 billion, and bring estimated pressures down to £19 billion.
The Treasury then adds back £2.9 billion to get to what they call “total pressures”, because this is how much the OBR assumes that the UK Government will underspend its limits by. Essentially, the OBR assumed actual spending would be £2.9 billion lower than the limits; given that pressures on the Treasury side are relative to the limits, this amount needs added to get to the total pressures compared with the OBR forecast.
This ‘Treasury maths’ is all fine – but what does this mean in practice?
This statement only looked at the spending side of the ledger, comparing what had been budgeted for with what the most recent view of spending plans is. It’s actually quite consistent with the latest data from the ONS as well, which when compared with the OBR’s forecast and extrapolated for the rest of the year, would suggest that consumption spending (mostly comprising of departmental spending) is running around £20 billion higher than expected in March.
Faced with this, the Chancellor has several options: she can let borrowing increase – which would happen automatically if she accommodated pressures; she can reallocate spending from other areas to combat pressures; she could raise taxes; or a combination of the three.
The immediate signal appears to be that the Chancellor is not prepared to just borrow the additional £22 billion. She has committed to £5.5 billion in savings this year: £1.4 billion coming from means-testing winter fuel payments to pensioners, with most of the rest coming from as-yet not fully specified ‘efficiencies’: out of the £3.2 billion pencilled in, just £0.9 billion are itemised.
This is a legitimate criticism of the plans – these savings are hard to deliver and can’t just be magicked into existence. Although the same (or even more) could be said about the fantasy £20 billion in productivity improvements that Jeremy Hunt claimed he had delivered in his response.
But this still leaves around £16 billion to cover. Rachel Reeves left the door open to some tax rises – she said she would not increase any of the headline rates of income tax, National Insurance contributions, VAT or corporation tax, but that still leaves room for base-broadening reforms and increases in other taxes.
We’ll have to wait until the Autumn to see how much of this additional £16 billion will be covered by tax rises, and to what extent the Chancellor will accommodate some additional borrowing. A combination of the two seems likely.
Did Jeremy Hunt or the Treasury hide this?
The more politically heated debate was the extent to which there was some sort of hiding of the ugly truth of what spending pressures looked like in March, at the time which the OBR included the Treasury’s plans in the forecasts for the public finances.
Richard Hughes, Chair of the OBR, wrote a letter to the Treasury Committee announcing a review of the “adequacy of the information and the assurances provided to the OBR by the Treasury regarding departmental spending.”
This is a pretty strongly worded letter, and in my view – as someone who was included in the scrutiny of these spending plans – reflects long-standing frustrations of OBR officials and commissioners about their inability to fully assess the credibility of spending plans.
The Chancellor announced she would be updating the Charter for Budget Responsibility to include the sharing information on ‘immediate spending pressures’ with the OBR. This sounds like a good idea, right? So good that in fact it already is in place, and is provided in legislation by compelling the Government to make available to the OBR essentially any information that is relevant for the preparation of the forecasts.
And the Treasury does share this, in my experience – although with some prompting required at times. Ultimately, the biggest issue here is more political and less tractable than the Chancellor let on, and reflects what former commissioner Andy King wrote earlier in the year.
The OBR is really in a bit of a bind, having to reflect spending policy which is set at a very aggregate level and which it cannot opt out of including in the forecasts. If it did, it would be the nuclear option – it would cause a breakdown in the institutional framework between it and the Treasury.
This is quite a difficult institutional arrangement, and there’s probably no single solution that would solve that. But I do think that a bigger focus on economic categories such as pay, procurement and other elements – much like Andy King’s suggestion – would be helpful in increasing scrutiny and understanding of the underpinnings of the forecast.
I would go further in suggesting doing this for the largest departments as well as the overall central government sector – which would allow further scrutiny in terms of understanding what’s being planned for different areas in the face of an ageing population.
This is an area where the Treasury’s lack of interest and buy-in into providing always struck me as odd and self-defeating. Of course it might unearth some difficult trade-offs, but it is also what a responsible workforce planning authority should be doing anyway. And in any case, to govern is to choose – and all of us members of the public would benefit from having access to better information on this.
That alone would be enough to make it worthwhile keeping the pressure on the Treasury to agree to provide this.
Brace yourselves: a spending review is coming
The Chancellor also provided some much needed clarity in terms of the spending review timetable. We now know that what is essentially an interim 1-year review will be concluded alongside the Budget on 30 October, where 2025-26 budgets will be set.
The spring of 2025 will see a welcome return to multi-year budgeting, with a full spending review covering at least three of the five forecast years. There will also be a requirement for a spending review every two calendar years, bringing a much-needed default assumption about the frequency of these exercises. They had become progressively ad hoc, and it will be up to the Government to show it does indeed comply with its own set of timetables.
Implications for the Scottish Government
A few things stand out in terms of what this means for the Scottish Government. In terms of timings, we now know when the UK Budget will be and that it will come alongside a block grant settlement for 2025-26, a pre-condition for the Scottish Budget.
This means we are likely to see the Cabinet Secretary for Finance appearing in the Debating Chamber to deliver the Budget Statement in late November or early December – hopefully avoiding the difficulties the Finance Committee had in scrutinising the Budget last year due to proximity to recess.
In the case of most of the measures announced, the direct impact on the Scottish Budget might be relatively limited, though we’ll have to wait until 30 October to be sure. A non-negligible proportion of the accommodated pressures will come from reductions in other spending areas – most of those reallocations would not change budget totals, although composition matters for Barnett consequentials.
If there is increased borrowing to allow for some of this additional spending, then there might be some added funding for Scotland.
But where there is an immediate prospect of a decision for the Scottish Government to make is on winter fuel payments (or pension age winter heating payments, as they are now known in Scotland). This is now a devolved benefit, and the Scottish Government gets an additional block of funding on the basis of equivalent in England and Wales, worth around £180 million.
With eligibility being restricted, the transfer from Westminster will be reduced, and it will therefore be for the Scottish Government to decide whether it follows the UK Government in changing eligibility or whether it wants to maintain universality and therefore needs to find additional funds for it.
Chancellor reveals £22 billion of unfunded pressures inherited from the previous Government
Findings of a Treasury spending audit reveal £22 billion of unfunded pledges inherited from the previous Government this year.
Chancellor takes “difficult decisions” to find £5.5 billion of savings this year and £8.1 billion next year.
A set of non-negotiable fiscal rules will be confirmed at Budget on 30th October, alongside further difficult decisions on tax and spending.
Finalised departmental budgets for this financial year and the next will be confirmed in October and a multi-year Spending Review will conclude in Spring 2025 to embed mission-led government and transform public services.
Addressing the House of Commons today (Monday 29th July) the Chancellor pledged to ‘restore economic stability’ after revealing £22 billion of unfunded pressures inherited from the previous Government.
Findings from a Treasury audit commissioned by the Chancellor expose billions of pounds of unfunded commitments from the previous Government, including the Rwanda scheme, the Advanced British Standard and the New Hospital Programme.
The previous Government also failed to increase Departmental budgets to cover public sector pay settlements, which were £11-12 billion higher than accounted for at the last Spending review. All of which were made on top of pressures resulting from higher inflation, increased asylum costs and funding for Ukraine.
Taking immediate action, the Chancellor announced £5.5 billion of savings this year and £8.1 billion next year to tackle the overspend. She also commits to set out full fiscal plans, alongside a Spending Review, at the Budget on 30th October.
Chancellor of the Exchequer, Rachel Reeves said: “This is not the statement I wanted to give today, and these are not the decisions I wanted to make. But they are the right decisions in difficult circumstances.”
The difficult decisions taken by the Chancellor have secured savings including over £1 billion next year, rising to over £4 billion by 29/30 by not proceeding with the previous government’s unfunded adult social care charging reforms.
Around £1.5 billion will be saved per year by targeting Winter Fuel Payments meaning households with someone aged over State Pension age receiving Pension Credit, Universal Credit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance will continue to receive Winter Fuel Payments. This will better target support for heating costs at those who need it.
Immediate savings include £800 million this year and £1.4 billion next year from scrapping the Rwanda migration partnership and scrapping retrospection of the Illegal Migration Act, £70 million this year by cancelling the Investment Opportunity Fund and other small projects, £185 million next year from cancelling the Advanced British Standard and £785 million next year from stopping unaffordable road and railway schemes.
The Chancellor also announced a review of the underdelivering New Hospital Programme.
To provide certainty for public sector workers and help put an end to devastating strikes costing billions of pounds, the Chancellor accepted the independent Pay Review Body recommendations and confirm pay uplifts averaging 5.5% for public sector workers.
To ensure that no Government is faced with a spending cliff-edge like this again the Chancellor set out plans to ensure Spending Reviews are set every two years to cover a three-year period, with a one year overlap with the previous Spending Review, helping build in greater certainty and stability over public finances.
Transparency over in year spending pressures will also be enhanced, with more information being provided to the OBR. In the House the Chancellor also re-committed to a single major fiscal event a year.
The Chancellor also outlined long-term plans to tackle unacceptably high levels of welfare fraud and error as well as addressing falling public sector productivity and a new Office of Value for Money.
During her statement the Chancellor outlined next steps in delivering tax commitments from the manifesto, to provide taxpayers with certainty ahead of their final confirmation at the Budget.
This includes ending the VAT tax breaks for private schools from 1 January 2025 to help recruit 6,500 new teachers, as well as replacing the outdated non-domicile regime with a new internationally competitive residence-based regime.
As also set out in the manifesto, the Chancellor confirmed plans for the Energy Profits Levy to be extended one year to 31 March 2030, have its investment allowances tightened and to increase the rate of the levy by three percentage points to 38% from 1 November 2024.
A call for evidence confirming the government’s intention to take action on the carried interest loophole has also been published, as well as a commitment to update on policies at the Budget to help close the tax gap further.
Further details for all tax policies, including costings certified by the Office for Budget Responsibility, will be published at the Budget.
Chancellor of the Exchequer Rachel Reeves statement to the House of Commons on 29/07/2024:
Mr Speaker, on my first day as Chancellor of the Exchequer, I asked Treasury officials to assess the state of public spending.
That work is now complete, and today I am presenting it to this House.
In this statement, I will do three things.
First, I will expose the scale – and the seriousness – of what has been uncovered.
Second, I will lay out the immediate action we are taking to deal with the inheritance.
And third, I will set out our longer-term plans to fix the foundations of our economy.
Let me take each of these in turn.
First, the inheritance.
Before the election, I said that we would face the worst inheritance since the Second World War.
Taxes at a seventy year high.
Debt through the roof.
An economy only just coming out of recession.
Mr Speaker, I knew all those things.
I was honest about them during the campaign.
And the difficult choices it meant.
The British people knew them too.
That is why they voted for change.
But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know.
[Redacted political content]
That is why we are today publishing a detailed audit of the real spending situation, a copy of which will be laid in the House of Commons Library.
I want to take the opportunity to thank Treasury officials for all their work in producing this document.
Let me explain what it has uncovered.
Mr Speaker, the government published its plans for day to day departmental spending at the Spring Budget in March.
But when I arrived at the Treasury…
… on the very first day…
… I was alerted by officials that this was not how much the previous government expected to spend this year.
Not even close.
In fact, the total pressure on these budgets across a range of areas was an additional £35bn.
Once you account for the slippage in budgets you usually see over a year…
… and the reserve of £9bn to deal with genuinely unexpected events…
… it means, Mr Speaker, that I have inherited a projected overspend of £22bn.
A £22bn hole in the public finances now – not in the future.
[Redacted political content]
If left unaddressed it would have meant a 25% increase in the government’s financing needs this year, pushing gilt issuance further into record highs outside of the pandemic.
So I will today set out the urgent work I have already done to reduce that pressure on the public finances by £5.5bn this year and over £8bn next year.
And let me be clear: I am not talking about bills for future years they signed up to but did not include, like the compensation for infected blood.
I am not talking about the state of public services in the future, like the crisis in our prisons, which they have left for us to fix.
I am talking about the money they were spending this year and had no ability to pay for…
[Redacted political content]
Resulting in the position that we have now inherited:
The reserve, spent three times over only three months into the financial year.
[Redacted political content]
Mr Speaker, the scale of this overspend is not sustainable.
Not to act is simply not an option.
We have already seen official ONS figures this month showing borrowing is higher this year than the OBR expected. [Redacted political content]
[Redacted political content]
There are very clear instances of specific budgets that were overspent…
… and unfunded promises that were made…
…but that, crucially, the OBR were not aware of for their March forecast.
I will now take each of those instances in turn.
First, the asylum system.
The forecast for the number of asylum seekers has risen dramatically since the last Spending Review, and costs for asylum support have risen sevenfold in the last three years.
But instead of reflecting those costs in the Home Office budget for this year, the previous government covered up the true extent of the crisis and its spending implications.
The document I am publishing today reveals a projected overspend on the asylum system, including their failed Rwanda plan, for this year alone of more than £6.4bn.
That was unfunded and undisclosed.
Next, in the wake of the pandemic, demand for rail services fell.
But instead of developing a proper plan to adjust for this new reality, the government handed out cash to rail companies to make up for passenger shortfalls, but failed to budget for this adequately.
Because of that, and because of industrial action, there is now an overspend of £2.9bn in the transport budget.
That was unfunded and undisclosed.
Mr Speaker, since 2022, the government – with the support of this whole House – has rightly provided military assistance to Ukraine in response to the Russian invasion.
The spending audit has found that there was not enough money set aside in the reserve to fund all these costs.
We will continue to honour these commitments in full.
[Redacted political content]
On top of these new pressures, since 2021, inflation was above the Bank of England’s target for 33 months in a row – hitting 11% at its peak.
But the government has not held a Spending Review since 2021.
That means they never fully reflected the impact of inflation in departmental budgets.
This had a direct impact on budgets for public sector pay.
When the last Spending Review was conducted, it was assumed that pay awards would be 2% this year.
Ordinarily, the government is expected to give evidence to the Pay Review Bodies on affordability.
But extraordinarily, this year, the previous government provided no guidance on what could or could not be afforded to the Pay Review Bodies.
This is almost unheard of.
But that is exactly what they did.
[Redacted political content]
I will not repeat their mistakes.
Where the previous government provided no transparency to the public, and no certainty for public services…
… we will be open about the decisions which are needed…
… and the steps we are taking.
That begins with accepting in full the recommendations of the independent Pay Review Bodies, and the details of these awards are being published today.
That is the right decision for the people who work in and most importantly the people who use our public services…
… giving hardworking staff the pay rise they deserve…
… while ensuring we can recruit and retain the people we need.
It should not have taken this long to come to these decisions.
And I do not want us to be in this position again.
So, I will consider options to reform the timetable for responding to the Pay Review Bodies in the future.
This decision is in the best interests of our economy too.
The last government presided over the worst set of strikes in a generation.
This caused chaos and misery for the British public.
And it wreaked havoc on the public finances.
Industrial action in the NHS alone cost the taxpayer £1.7bn last year.
That is why I am pleased to announce today that the Government and the BMA have agreed an offer to the Junior Doctors, on which my RHF the Health Secretary will set out further details.
And let me pay tribute today to my RHF, whose leadership on this issue has paved the way to ending a dispute which has caused waiting lists to spiral, operations to be delayed and agony for patients to be prolonged.
Today marks the start of a new relationship between the government and staff working in our National Health Service – and the whole country will welcome that.
Mr Speaker, where the previous government ducked the difficult decisions, I am taking action.
Because knowing what they did about the state of the public finances, they continued to make unfunded commitment after commitment that they knew they could not afford.
[Reacted political content]
Leaving us with an overspend of £22bn this year.
Where they presided over recklessness, I will bring responsibility.
I will take immediate action.
Let me set this out in detail.
First, pay.
I have today set out our decision to meet the recommendation of the Pay Review Bodies.
Because the previous government failed to prepare for these recommendations in departmental budgets, they come at an additional cost of £9bn this year.
So, the first difficult choice I am making is to ask all departments to find savings to absorb as much of this as possible…
… totalling at least £3bn.
To support departments as they do this, I will work with them to find savings ahead of the Autumn budget…
… including through measures to stop all non-essential spending, such as on consultancy and government communications.
And I am asking departments to find 2% savings in their back-office costs.
I will now deal with a series of commitments made by the previous government which they did not fund.
Because if we cannot afford it, we cannot do it.
First, [Redacted political content] the former Prime Minister announced the introduction of a new qualification: the “Advanced British Standard”.
That is a commitment costing nearly £200m next year, rising to billions in future years.
Mr Speaker, this was supposed to be the Prime Minister’s legacy.
But it turns out, he didn’t put aside a single penny to pay for it.
So we will not go ahead with that policy.
Because if we cannot afford it, we cannot do it.
Next, the Illegal Migration Act, passed by the previous government, made it impossible to process asylum applications or remove people who have no right to be here.
[Redacted political content]
We need a properly controlled and managed asylum system where rules are properly enforced so that those with no right to be here are swiftly removed.
So we have scrapped their failed Rwanda scheme, which placed huge pressure on the Home Office budget.
To bring down these costs as soon as possible, my RHF the Home Secretary has already laid legislation to remove the retrospective element of the Illegal Migration Act…
… which will significantly reduce the use of hotel accommodation.
These measures will save nearly £800m this year and avoid costs spiralling even further next year.
This was a bad use of taxpayers’ money and we will not do it.
Mr Speaker, the previous government claimed it was “levelling up” our country.
[Redacted political content]
At Autumn Statement last year, the former Chancellor announced nearly £150m for an “Investment Opportunity Fund”.
But not a single project has been supported from the Fund.
So, following discussions with my RHF the Deputy Prime Minister, I am cancelling it today.
The previous government also made a series of commitments on transport.
Promises that people expected to be delivered.
[Redacted political content]
We have seen from the National Audit Office the chaos that the previous government presided over.
Projects over budget and delayed again and again.
The spending audit has revealed nearly £800m of unfunded transport projects that have been committed next year.
So my RHF the Transport Secretary will undertake a thorough review of all these commitments.
As part of that work, she has agreed not to move forwards with projects that the previous government refused to publicly cancel, despite knowing full well they were unaffordable.
That includes proposed work on the A303 and the A27…
… and my RHF will also cancel projects in the “Restoring our Railways” programme which have not yet commenced.
If we cannot afford it, we cannot do it.
Mr Speaker, the previous government had plans for a retail sale of Natwest shares.
We intend to fully exit our shareholding in NatWest by 2025-26.
But having considered advice I have concluded that a retail share sale offer would involve significant incentives that could cost taxpayers hundreds of millions of pounds.
It would therefore not represent value for money, and it will not go ahead.
This is a bad use of taxpayers’ money and we will not do it.
Next, let me address the unfunded pressures in our NHS and our social care sector.
In October 2020, the government announced that 40 new hospitals would be built by 2030.
Since then, only 6 have started their main construction activity.
And less than half of the 40 hospitals have even started construction.
The National Audit were clear that delivery was wildly off track.
But since coming into office, it has become clear that the previous government continued to maintain its commitment to 40 hospitals…
… without anywhere close to the funding required to deliver them.
[Redacted political content]
We need to be straight with the British people about what is deliverable and what is affordable.
So we will conduct a complete reset of the New Hospitals Programme, with a thorough, realistic and costed timetable for delivery.
Mr Speaker, adult social care was also neglected by the previous government.
The sector needs reform to improve care and to support staff.
In the previous parliament, the government made costly commitments to introduce adult social care charging reforms.
But then, they pushed them back repeatedly…
… including just two years ago…
… because they knew that local authorities were not ready…
… and that their promises were not funded.
So it will not be possible to take forward these charging reforms. This will save over £1bn by the end of next year.
Mr Speaker, the previous government made commitment after commitment without knowing where the money was going to come from.
They did this repeatedly, knowingly and deliberately.
[Redacted political content]
And I am taking the first steps to clean up what they have left behind.
But the scale of the inheritance we have been left, means the decisions we have so far announced will not be enough. This level of overspend is not sustainable.
It therefore falls to us to take further difficult decisions on spending that generate in year savings.
Mr Speaker, the last Labour government lifted over one million pensioners out of poverty.
And I repeat today the commitment we gave that we will protect the Triple Lock.
But the scale of the situation we are dealing with means incredibly tough choices.
So that is why today, I am making the difficult decision that those not in receipt of Pension Credit will no longer receive the Winter Fuel Payment from this year onwards.
The Government will continue to provide Winter Fuel Payments worth £200 to households receiving Pension Credit…
… or £300 for households in receipt of Pension Credit with someone aged over 80.
Let me be clear: this is not a decision I wanted to make.
Nor is it one that I expected to make.
But it is a necessary and urgent decision I must make – It is the responsible thing to do to fix the foundations of our economy and bring back economic stability.
Alongside this change, I will work with my Right Honourable Friend the Work and Pensions Secretary to maximise the take up of Pension Credit by…
… bringing forward the adminstration of Housing Benefit and Pension Credit, pushed back by the previous government…
… and working with older peoples’ charities and local authorities to raise awareness of Pension Credit, and help identify households not claiming it.
Mr Speaker, this is the beginning of a process, not the end.
I am announcing today that I will hold a Budget on October 30th alongside a full economic and fiscal forecast from the Office for Budget Responsibility.
I have to tell the House that Budget will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax. [Redacted political content]
It will be a Budget to fix the foundations of our economy.
And it will be a Budget built on the principles that this new government was elected on.
First, we will treat taxpayers’ money with respect by ensuring that every pound spent is well spent…
… and we will interrogate every line of public spending to ensure it represents value for money.
Second, I can repeat – from the despatch box – our manifesto commitment that we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.
And today my Right Honourable Friend the Exchequer Secretary is publishing further detail on our manifesto commitments to close tax loopholes and clamp down on tax avoidance…
… to ensure we bring that money in as quickly as possible.
My third principle is that we will meet our fiscal rules.
We will move the current budget into balance…
… and we will get debt falling as a share of the economy by the end of the forecast.
These are the principles that will guide me at the Budget.
But let me be honest: challenging trade-offs will still remain.
So today I am also launching a multi-year Spending Review.
The review will set departmental budgets for at least three years, providing the long-term certainty that has been lacking for too long.
As part of that process, final budgets for this year and budgets for next year – 2025-26 – will be set alongside the Budget on 30th October.
I will look closely at our welfare system…
… because if you can work, you should work.
That is the principle of this government.
Yet under the previous government, welfare spending ballooned while inactivity has risen sharply in recent years.
So we will ensure the welfare system is focused on supporting people into employment…
… and we will assess the unacceptable levels of fraud and error in our welfare system, and take forward action to bring that down.
Mr Speaker, to fix the foundations of our economy, we must ensure that never again can a government keep from the public the true state of our public finances.
The fiscal framework which I have inherited had several flaws.
It allowed the government to run down the clock on departmental budgets…
… avoid difficult decisions
[Redacted political content]
So I am announcing the most significant set of changes to our framework since the inception of the Office for Budget Responsibility, which will come into effect this Autumn.
First, we have introduced legislation to ensure every significant and permanent tax or spending announcement must be accompanied by an OBR forecast through our “fiscal lock”, so we can never again see a repeat of the mini-budget.
Second, we will require the Treasury to share with the Office for Budget Responsibility its assessment of immediate public spending pressures, and enshrine that rule in the Charter for Budget Responsibility…
… so no government can ever again cover up the true state of the public finances.
And finally, we will ensure that never again do public service budgets get set at only a few months’ notice.
Instead, Spending Reviews will take place every two years, with a minimum planning horizon of three years, to avoid uncertainty for departments and to bring stability to the public finances.
I have already spoken to the Chair of the Office for Budget Responsibility to brief him on the findings of our audit and our reforms.
He has welcomed those, and will initiate his own review into the information provided to the OBR by the Treasury ahead of the Spring Budget. The Treasury stands ready to support this work.
Mr Speaker, by launching the Spending Review I am also today firing the starting gun on a new approach to public service reform to drive greater productivity in the public sector.
We will embed an approach to government that is…
… mission-led…
… that is reform driven, with a greater focus on prevention and integration of services, at both a national and a local level..
… and that is enabled by new technology, including through the work of my RHF the Secretary of State for Science, Innovation and Technology on the opportunities of AI to improve our public services.
And we will establish a new Office of Value for Money, with an immediate focus on identifying areas where we can reduce, stop or improve the value of spending….
… and we will appoint a Covid Corruption Commissioner, to bring back money owed to taxpayers after contracts worth billions of pounds were handed out by the previous government during the pandemic.
Ahead of the Spending Review, I will also review the cost of our political system, including restricting eligibility for ministerial severance payments based on time in office.
I expect all levels of government to be run efficiently and effectively and I will work with leaders across our country to deliver that.
That means effective local government …
… a civil service delivering good value for the British taxpayer…
… and reform of our political institutions, including the House of Lords, to keep costs as low as possible.
The Budget and Spending Review will also set out further progress on our number one mission: to grow our economy.
Because economic growth is the only way to sustainably improve our public services and sustainably improve our public finances.
So we will use the Spending Review to prioritise specific areas of capital investment that leverage in billions more in private investment.
It won’t happen overnight.
It will take time and it will take focus.
But we have already made significant progress.
Planning reforms to get Britain building.
A National Wealth Fund to catalyse private investment
A pensions investment review to unlock capital for our businesses.
Skills England to create a shared national ambition to boost skills across our country.
And work across government on a new industrial strategy…
… driven forward by a Growth Mission Board to ensure we deliver on our commitments.
We have fundamental strengths on which we can build.
And I look forward to welcoming business leaders to the International Investment Summit in Britain later this year.
Because I know that if we can create the stable conditions which investors need to thrive, we can build on the UK’s strengths and return confidence to our economy..
… so that entrepreneurs and businesses big and small know that this is a place to do business as that is the bedrock on which economic growth must be built.
Mr Speaker, the inheritance from the previous government is unforgiveable.
Chancellor to pledge to ‘fix the foundations of our economy’ as she unveils the spending inheritance left by the previous government.
Reeves to set out reforms to deliver economic stability and protect the public finances, as she announces date of Budget later this year.
Office of Value for Money formed to challenge government to deliver better value for money for taxpayers.
Chancellor of the Exchequer Rachel Reeves will this afternoon (Monday 29 July, after 3:30pm) vow to ‘fix the foundations of our economy’ as she publishes an audit of the spending inheritance left by the previous administration.
Accusing the previous government of ‘covering up the true state of the public finances,’ the Chancellor will announce immediate action to restore economic stability and deliver departmental savings this financial year.
The announcements will be a response to the findings of the Treasury’s spending audit, which shows that the previous government overspent this year’s budgets by billions of pounds after making a series of unfunded promises.
The Chancellor will confirm that she has commissioned an Office for Budget Responsibility forecast to coincide with a Budget and Spending Review to be held later this year.
The Budget will set out how the government’s robust fiscal rules will be met: balancing the current budget so that day-to-day costs are met by revenues and getting debt falling as a share of the economy by the fifth year of the forecast.
Speaking in the House of Commons later today, the Chancellor of the Exchequer Rachel Reeves is expected to say: “Before the election, I said we would face the worst inheritance since the Second World War.
“Taxes at a seventy year high. Debt through the roof. An economy only just coming out of recession. I knew all those things. I was honest about them during the election campaign. And the difficult choices it meant.
“But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know. Things that the party opposite covered up from the country.”
She will add: “It is time to level with the public and tell them the truth.
“The previous government refused to take the difficult decisions. They covered up the true state of the public finances. And then they ran away. I will never do that.
“The British people voted for change and we will deliver that change. I will restore economic stability. I will never stand by and let this happen again.
“We will fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off.”
The Chancellor will announce she is committing the government to one major fiscal event per year to put an end to ‘surprise budgets’ which have previously caused uncertainty for both the markets and family finances across the country.
A new Office of Value for Money will be established, using pre-existing civil service resource, to put an end to wasteful spending in government, providing targeted scrutiny of public spending so that value for money governs every decision government makes.
The Office will immediately begin work on identifying and recommending savings for the current financial year, while also establishing where targeted reforms of the system can ensure that poor value for money spending is cut off before it begins.
Reforms bearing down on waste in the public sector will also be announced today, driving efficiency through government departments and arms length bodies (ALBs). Immediate action will be taken to stop non-essential spending on consultants, alongside disposing of surplus estates and hastening delivering admin efficiencies in departments.
Earlier this month, the Government introduced the Budget Responsibility Bill at the King’s Speech to deliver economic stability by guaranteeing that never again can a government play fast and loose with the public finances.
The Bill ensures all significant fiscal announcements on tax or spending which are worth more than 1% of the UK’s GDP will be subject to scrutiny by the independent Office for Budget Responsibility. This will guard against large-scale unfunded commitments in the future.
FORMER Tory Chancellor Jeremy Hunt said the new Labour government is ‘peddling nonsense’. He added: “The books were wide open and what they show is a healthy, growing economy.”
The Conservatives claimed throughout the recent election campaign that Rachel Reeves secretly plans to raise taxes.
As we highlighted in last week’s blog, we recently saw the state opening of Parliament at Westminster which allowed the new UK Government to set out their legislative programme (write MAIRI SPOWAGE and HANNAH RANDOLPH of Fraser of Allander Institute).
Along with a huge amount of pomp, ceremony and grand tradition, this is the first formal expression we have had of how the Labour manifesto will be turned into government policy and action.
The King’s Speech is focussed on legislative changes, so other areas where policy changes are likely be taken forward without legislative changes (perhaps through public service reforms, or simply changes in spending, such as health) always feature less prominently.
However, there were plenty of bills to examine – 40 bills were presented by the speech on 17th July. This is the highest number of bills to be presented in a monarch’s speech for almost 20 years.
Which of these bills are relevant to Scotland?
The patchwork of devolution in the UK means that the extent to which these bills are relevant for Scotland is a complex picture. The chart below shows the spread, which demonstrates that in theory 22 of the bills are likely to impact upon legislation in Scotland.
Chart: Number of bills in the King’s Speech by territorial reach
Source: UKG
Digging into the detail of each of these bills shows that the impact on Scotland gets more complicated.
One of the UK wide bills is the National Wealth Fund, which will bring together some existing initiatives such as the UK Infrastructure Bank and the British Business Bank, as well as additional capitalisation of £7.3 billion over the course of the next parliament. As well as this additional public investment, the idea of bringing these different organisations together is to make the business support landscape simpler for businesses, to “create a single coherent offer for businesses and a compelling proposition for investors”.
Leaving aside the extent to which this level of extra investment will move the dial on investment overall, there is also a question whether this is going to actually simplify things for businesses in Scotland. Economic development is devolved, and we have a number of bodies that provide potential support, including the Scottish National Investment Bank and the three Enterprise Agencies.
A common complaint from businesses, particularly those with limited capacity, is the complex landscape for business support. Therefore it will be interesting to see the cross-governmental working (if any) on this to simplify things for businesses right across the UK.
Another key measure is on planning. The Planning and Infrastructure Bill proposed in the King’s speech “is expected to extend and apply to England and Wales. Some measures may also extend and apply to Scotland”. It is not clear from the explanatory notes to the King’s speech what this will actually mean for Scotland, although there is some mention of ensuring grid connections are available in a timely fashion (which would be a reserved issue in the energy infrastructure space) may well be the relevant point.
Again, the devil will be in the detail of the bill, and the extent of cross-governmental working, for us to understand how this could change things for businesses operating in Scotland.
The Crown Estates Bill does not apply to Scotland because it is devolved: but our understanding from the nots to the Bill that the provisions in the Bill for England, Wales and NI are essentially bringing in the same fiscal flexibilities that exist for the Crown Estate in Scotland.
The Hillsborough Law is the one which currently has an indeterminate territorial reach, and is one of the more vague bills included in the list of 40. This will “place a legal duty of candour on public servants and authorities” to “address the unacceptable defensive culture prevalent across too much of the public sector – highlighted by recent reports such as Bishop James Jones’s report into the experiences of the Hillsborough families and the recent Infected Blood Inquiry report”. This is fulfilling a manifesto commitment, but a concern could be that legislation to change culture may be ineffectual. This is in no way to belittle the catastrophic failures in the system that happened in these instances, just a question over whether this kind of law is the way to address it.
These are a few examples, but the detail of all the bills and crucially how they are implemented will be important to understand the actual impact on Scottish law, businesses and citizens.
Two child benefit limit causes first Labour rebellion
This week, we also saw the vote on the King’s speech – the first vote for the Labour Government, and, perhaps predictably given the size of their majority, the first rebellion from a few backbenchers.
The SNP laid a motion to amend the king’s speech to include the abolition of the two-child benefit limit. The amendment was voted down, but removing the two-child limit is now being widely debated particularly because seven Labour MPs voted for the amendment and have had the whip withdrawn. More broadly, it has drawn attention to what the new Labour government’s plans for an anti-poverty strategy might be.
The two-child limit applies to households with three or more children receiving Universal Credit or tax credits. Both give households additional amounts for the first and second child, but no further benefits or credits for the third or subsequent children. It does not impact on Child Benefit.
The two-child limit was introduced in 2017 and applies to any child born after 6 April 2017. As time goes on and a greater proportion of children fall into that category, more families are affected.
HMRC and DWP report that 440,000 households were affected as of April 2024, of which 26,000 are in Scotland.
Estimates from the Institute for Fiscal Studies show that the two-child limit currently costs affected households £3,400 per year, per child on average. This is likely one driver for a widening gap in poverty rates for families with one or two children versus those with more.
The Scottish Government has introduced a new benefit, the Scottish Child Payment, as part of their efforts to reduce child poverty. To what extent does the Scottish Child Payment mitigate the effects of the two-child limit in Scotland?
The Scottish Child Payment (SCP) is a £26.70 per week, per child under 16 benefit available to households in receipt of qualifying benefits like Universal Credit. SCP does not restrict the number of children in a household who can receive the benefit, nor does it have a lower amount for second and subsequent children.
SCP is therefore likely to mitigate the effect of the two-child limit on households in Scotland to some extent. Households receive about £1,400 per year for each eligible child from SCP, which does partially offset the £3,400 they might be able to claim for third and subsequent children in the absence of the two-child limit.
Chart 2: Child poverty rate by number of children in the household, Scotland
Source: Scottish Government and Department for Work and Pensions Notes: Child poverty rates are averaged over three years of Family Resources Survey data. For the last three years, figures represent a two-year average excluding the 2020-21 data due to data collection issues associated with the Covid-19 pandemic.
The mitigation of SCP, plus other factors, may contribute to lower gaps between child poverty among children in households with 3+ children versus in households with fewer children (see chart).
The gap between poverty for children by family size has grown since about 2012-15 for the UK as a whole. Just over one in five (22%) of children in households with only one or two children were in poverty in 2020-23, compared to nearly one in two (44%) of children in households with more children.
In Scotland, however, there is slightly less of a gap, albeit one that has grown more in the last couple of years. 19% of children in households with 1-2 children live in poverty, compared to 38% of children in households with more children. Because some of the effects of the two-child limit are mitigated by SCP, removing the two-child limit might have less of an effect in Scotland than in the rest of the UK – but it would still have an impact.
The Scottish Government has estimated that about 10,000 children would be taken out of poverty in Scotland if the two-child limit were removed, many in households with 3+ children.
For context, that would reduce child poverty in Scotland by about 1pp. That’s on top of an estimated 60,000 kept out of poverty by the SCP in 2024-25.
What next for the two-child limit?
The Labour Leadership are sticking to the manifesto on which they were only recently elected: that they would like to remove the two-child limit in time, but that they do not think they are in a position to remove it just now due to the public finances.
The cost is estimated at about £3.4b per year in the long run, about 3% of the working-age benefit budget. So while fiscal responsibility is to be lauded, this would be a fairly minor policy change in fiscal terms in exchange for progress on child poverty at the UK level.
The cost of these increased benefits for households in Scotland would still fall on the UK Government rather than the Scottish Government, since Universal Credit and tax credits are both reserved.
Labour have also pointed out that removing the two-child limit is not a silver bullet, and that they want to take the time to develop a coherent anti-poverty strategy across different policy areas.
As usual, we hope that such a plan would be evidence-based. There may also be opportunities to learn from devolved policies like SCP that should be taken up by the new UK Government.
Plans to reveal which new hospitals, surgeries and treatment centres will be built in Scotland have been delayed.
In a letter to Holyrood’s finance committee, Cabinet secretary for Finance and Local Government Shona Robison explained: ‘To provide as much certainty as possible to parliament and wider stakeholders of our capital investment plans, I must wait until I have confirmed capital allocations from the new UK government”.
That confirmation is not expected until late Autumn – and, given the new Labour government’s warnings about a £20 bn. ‘black hole in the UK’s finances, it’s not expected to be good news.
Lothian Conservative MSP, Miles Briggssaid: “This further delay to finding out if SNP Ministers will reinstate the funding for a new Princess Alexandra Eye Pavilion is extremely disappointing.
“We urgently need a new eye hospital to improve the delivery of ophthalmology across the South East of Scotland.
“The decision by SNP Ministers not to reverse funding for a new hospital has been a disastrous decision and will ultimately lead to additional costs for the delivery of a new hospital.
“I will continue to lead calls for the funding for a new eye hospital. What we desperately need is to see some leadership from SNP Ministers.”
