PBE Reacts: Chancellor's Autumn Statement 2023

“With his Autumn Statement, the Chancellor has chosen to privatise the gains of an £88.5 billion fiscal windfall – which has been largely driven by a boost to tax revenue resulting from inflation staying higher for longer. Relative to what might have been for workers and businesses, this will provide some support to growth and to living standards. 

“But the crisis in public services has been swept under the carpet. The Chancellor has signed off on a £19bn a year real-terms reduction in spending on public services by 2027-28. This is roughly equivalent to the total day-to-day spending of the Home Office and HMRC combined - indicating that large parts of the nation’s public services face a renewed period of austerity. 

“Stepping back from the ups and downs of today’s projections and policies, it remains the case that we are living through the largest reduction in household incomes since records began in the 1950s, with recovery to pre-pandemic levels not expected to arrive until 2027-28. 

“The combination of continued stagnation in incomes and real-terms cuts in public services is likely to fall heaviest on the people who have already been most exposed to the economic and health challenges of recent years. The OBR now expects an additional 85,000 people to fall into unemployment relative to its March projections. And the share of household income being used to make debt repayments is expected to double over the coming years, reaching 8.3% by 2027-28 – back to levels last seen in the immediate aftermath of the financial crisis. 

“The nation’s charities will undoubtedly step in to support this group at the sharp end, as they have done through a succession of recent crises. With three-quarters of people referred to food banks known to be disabled or living with someone with a disability, changes to Work Capability Assessments - cutting support for 371,000 people by up to £390-a-month - are only likely to heighten this demand. 

“The charity sector has already been running hot while dealing with the triple threat of elevated demand, higher costs and falling donations. This precarious balancing act is set to continue. Based on the OBR’s figures, we project that charity sector income is likely to be £9bn lower than the pre-Covid trend. 

“Beyond the here and now, it is critical that after 20 years of anaemic growth, the focus moves to thinking about wider structural changes, considering the vital part charities have to play in those plans.” 

Subscribe to our newsletter: Sign up to our mailing list | Pro Bono Economics