Public Services

Budget 2016: Osborne opts for tweaks over drastic overhauls

Published 16 March 2016

Kable chief analyst Jessica Figueras expects departmental efficiency reviews to keep civil servants on their toes, despite lack of eye-catching announcements

 

Although there were a few characteristically eye-catching announcements, this Budget was 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.

The two key themes here were devolution and action on tax.

A more concerted crack-down on tax avoidance and evasion means a plethora of changes to tax rules, reliefs and rates, which increases HMRC's workload considerably.

It's good to hear HMRC plans to increase its use of analytics and real-time information to achieve these goals, but whispers of delays to the digital tax system (which Spending Review 2015 promised would save the taxpayer £300m) were less welcome. While we are waiting for digital tax to deliver, HMRC is investing in its unfashionable but necessary offline contact channels. These factors probably explain some of the £100m budget increase it has received both this year and next year.

There's also some intriguing news on business rates, with HMRC set to play an increasingly important role in collecting what were supposed to be local taxes. This seems somewhat at odds with the devolution agenda; it probably reflects increasing concern in the

Treasury over duplication of back office and administration functions by local authorities. This will be a big, complex and ambitious IT project to deliver.

But new city deals, and fresh powers granted to the largest devolved administrations, should see Whitehall gradually becoming less of a focal point. In particular, what is happening in Greater Manchester - which is gaining fresh powers in criminal justice - provides a window into the Conservative vision of devolution.

A new ONS-led data science hub, a National Institute for Smart Data Innovation in the growing Newcastle cluster, and a more coordinated push on national infrastructure is all welcome news - but we would hope that such investments come on top of the economic support provided by local government, rather than simply replacing it.

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