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CLASS Panel Reacts To The Spending Review

Our expert panel reflect on what Chancellor Sajid Javid's spending review means for trade, tax and education.

Shaista Aziz is a journalist, writer, comedian, and co founder of the Labour Homelessness Campaign

More than 320,000 people are homeless in Britain today. Rough sleeping is up 169% since the Tories took power. At least 597 human beings died on the streets last year. Homelessness is not an individual choice - it is a political choice. A choice being made every day by those in power.

It’s the choice made in every cut to welfare benefits for the worst off and every cut to mental health and addiction services.

In June, the Local Government Association’s analysis showed that across the country, homelessness services faced a funding gap of more than £100 million in 2019/20 and £421 million by 2024/25.

Councils have updated their plans on homelessness prevention since the Homelessness Reduction Act was introduced in 2018, but with council budgets slashed and a lack of social housing being built, more families and people are being placed in temporary and emergency accommodation, the cost of which is unsustainable in terms of human misery and suffering and on over stretched council budgets.

The government must link homelessness including rough sleeping with the need for a decent welfare state providing the support people need. The welfare state needs to be much more than a safety net for people, it needs to be a system that enables people to live dignified lives where they have the right to thrive.

A decade of Tory austerity has stress fractured the welfare system. We need to see homeless prevention as the key focus of the Spending Review and real action on building social housing across the country.

Richard Murphy is a chartered accountant, tax expert and economist and now sits on the National Advisory Panel of CLASS

One would think a Spending Review has very little to do with tax. The logic is that spending is the opposite side of the revenue cycle from tax. But that’s not quite true.

Let’s leave aside for a moment that for all the trumpeting that this Spending Review ends austerity. Let’s also ignore the fact that it is unfunded: this is all about using the so-called ‘fiscal headroom’ to bump spending a little and keep within the government’s own self-imposed rules on borrowing. Let’s instead ask the obvious question, which is whether all this is about simply creating problems for the future?

My answer is that it is, but precisely because of the fact that this Spending Review fails to recognise an issue overlooked for far too long now, and that is that it leaves HM Revenue & Customs critically underfunded.

According to the review HMRC will be getting inflation increases to its budget excluding £382 million of, presumably, one off spending to fund a Brexit transition.

This is the problem. HMRC has had its budget cut for years. It’s going through a massive reorganisation. It is critically short of skills. And Brexit massively increases tax risk in the UK, whether because of the loss of cooperation  on some issues, the complete lack of integration of VAT with EU systems in the future which will create enormous opportunities  for fraud, or because a widespread extension of tariffs will be exceedingly complex to police. None of this appears to be allowed for on an ongoing basis. The result is that it must be assumed that the scale of tax abuse in the UK will increase when Brexit in turn increases the opportunities for it to happen.

The Spending Review may assume that extra borrowing will cover spending growth. But that has implicit in it the assumption that HMRC will, in the most extraordinary of times and facing considerable operational and legal difficulties, keep the tax flowing in. I think that very doubtful.

Tax may not add up in this Spending Review. 

PHOTO: (Main) Jeon Han, labelled for reuse by Flickr. Both images of authors checked through TinEye & judged copyright-free.