Autumn Statement: Pain, sorcery and a rabbit called Tim

The Chancellor has been busier than usual in the run up to an Autumn Statement. Before today’s speech he has been crossing the country announcing policies and investments as if Christmas had arrived early. So much so I half expected him to be turning on our local Xmas lights with his new haircut and his ‘hi viz’ jacket (in the end it was someone from ‘Casualty’).

This is a chancellor who likes to build things. It is central to his ‘Long Term Economic Plan’. £2billion for the NHS, a £15billion ‘roads revolution’ and for HE, a £200million ‘Crick of the North’ in Manchester and a deal with UCL and UAL to build ‘Olympicopolis’ in East London.

In Gordon Brown’s day he’d be having one of his Macavity the cat moments. But even he has been in public this week announcing his retirement as an MP in 2015. Paying tribute to Brown’s ‘years of public service’ was probably not on David Cameron’s grid for the day before the Autumn Statement.

Cameron is much happier blaming Gordon Brown and Labour for the worse than expected borrowing figures. However, any fears that the recent slowdown in the eurozone plus a crisis in confidence elsewhere means that UK growth may not be quite as strong as we’d expected, have been discounted.

The Treasury and the OBR are going for 3% growth this year and then slightly lower estimates of between 2.2 and 2.4% even as the ‘warning lights flash in the global economy’ (the Chancellor’s words today).

Pain

But however he tells the story, Osborne has fewer cards to play and so too will Labour once they’ve had time to digest these numbers. This gives both parties (and any others that they might do deals with) rather less room for manoeuvre in their 2015 manifestos and beyond. IPPR estimate tonight that under the plans announced in the Autumn Statement, BIS will need to find savings of £4.7bn in the next Parliament. It’s hard to imagine how higher education could get away without a painful squeeze in that scenario.

In time this may prevent Labour from committing to any immediate restoration of teaching grant on HE or a corresponding reduction in headline fees. For the Conservatives it means that their Conference commitments to tax giveaways in the next Parliament look pretty shaky.

For all parties and for non-protected government departments, it makes the period of 2015-2020 look very bleak indeed. Austerity isn’t going away any time soon. The main headline today is that Osborne has set a spending envelope that will make the pips squeak.

New commitments

In spite of this, Osborne has found political space to make some new commitments. In spending terms they either recycle cash – such as new devolution deals or cash that doesn’t appear on the current balance sheet. The extension of HE loans to PG students is one such announcement. But other than a value of up to £10k, available for any course and for the under 30s, there isn’t that much detail. The Treasury expects 40,000 of them from 2016-17 but the exact details of how this will work will be ironed out in a consultation early next year – everything we know so far is here.

Of the £5.9 billion committed to science capital in the next parliament (2016-21) and largely announced or trailed in previous budgets, only a minority looks to be new. It’s still very welcome of course, but we knew this was coming.

Interestingly £2.9 billion of this pot is earmarked for the ‘grand challenges of our time’. That will raise eyebrows in the sector and the spirits of Haldane (as well as Barnett) will get an airing over the next weeks and months.

But for Osborne, it’s an opportunity to build his beloved Northern Powerhouse. So it’s ‘a massive, quarter of a billion investment in a new Sir Henry Royce Institute for advanced material science in Manchester, with branches in Leeds, Liverpool and Sheffield.’ And another £100 million or so for the Hartree Big Data centre at Daresbury and more for other projects based in Newcastle and Sheffield.

But it’s not all the North. London via the British Library is getting the £42 million Alan Turing Centre. Oh yes and we’re going to Mars. Great questions and opportunities indeed.

Rabbits

Not for the first time there are some rabbits pulled out of the hat. Postgraduate loans is clearly one. Quite a few organisations are bidding for naming rights of the policy but I will call it Tim (in honour of Leunig) who first proposed something like it. A rabbit is also produced in Monty Python and the Holy Grail. It is introduced by a horned sorcerer, casting random fire bolts across a scorched landscape. Some call him Tim, but I’ll call him George.

Will it come back and bite them? Who knows. It will undoubtedly support some to go on to postgraduate study that might not have done so otherwise. But like undergraduate loans it will also have consequences that neither they nor we have yet to foresee. Not least for those over 30 who won’t qualify for loans at all.

Tax breaks for the creative industries are continuing – now for children’s TV as well as animation. There’s also a new theatre for Manchester alongside the materials centre announcement. In a throwback, it’s going to be called ‘The Factory’. As Osborne said, ‘Anyone who’s a child of the 80s will think that’s a great idea’. Indeed they will and that’s good, because they may need something else to do with their evenings.

Scorched earth

But overall there are two big themes that are consolidated in this Statement. Firstly, Osborne is continuing to cut and cut an already scorched earth until 2020. It’s going to be tough. Secondly, this is an increasingly interventionist Treasury, becoming more and more comfortable with the idea of industrial policy and picking winners. Some might even call him Keynesian or possibly Plan B, because Osborne’s is also a Treasury that has put spending on infrastructure and science at the core of this thinking.

From materials science and big data to space exploration, regional orchestras and children’s telly – the Treasury is the real Department for Universities and Science these days and Osborne is undoubtedly its chief minister.

So if you’re not talking to George or to his Treasury colleagues, you’re in trouble – cast somewhere in the undefined, but massive, departmental savings and efficiencies that will dominate the next Parliament. The next Spending Reviews and Budgets look bloody.

Unless George has a deal to do, then he doesn’t have much for you at all. Except for pain. This is an Autumn Statement that is more about haircuts than rabbits. George does like his new haircut, but are you ready for yours?

Elsewhere on Wonkhe: Policy Watch – Mark Leach brings together details of the postgraduate loan policy and the reactions to it from across HE. Read that here.

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