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Chancellor announces review of low pay in statement clouded by Brexit uncertainty.
Chancellor Phillip Hammond announced a review of low pay in a Spring Statement overhung by a “cloud of Brexit uncertainty”.
The Chancellor said the review of the minimum wage will be led by Professor Arindrajit Dube from the University of Massachusetts and will have a particular focus on “innovative and ambitious minimum wage models”. However, he added that it will not attempt to consider the causes of low wage employment. a widening in the earnings distribution.
A report this week from the Office for Budget Responsibility highlights a growing divide in wage rises. It suggests pay of the top 0.1% has been rising considerably faster than the average over the last year or more.
Hammond also said the £700m previously suggested to help small firms take on more apprentices will become available from as early as April 2019. And he announced changes to the UK’s visa scheme meaning foreign nationals applying for PhD level roles will become exempt from the UK’s visa cap from this Autumn to address the UK’s ongoing talent shortage.
Other announcements in the Spring Statement were contingent on a Brexit deal being reached. For instance, the Chancellor said a £37bn National Productivity Investment fund could be set up to help businesses address the UK’s lagging productivity rate and he suggested austerity could end if a Brexit deal was agreed. For now, however, the benefits freeze continues. The Institute for Fiscal Studies said there was “no reprieve” in the Spring Statement for the millions of working age families dependent on benefits. It said after four years of the benefits freeze, 10 million families will have lost an average of £420 a year. It called for an urgent review of long-term spending challenges, particularly the impact of the ageing population on public spending.
Childcare providers criticised the lack of any new funding for childcare, comparing this with announcements of cash for other areas, such as housebuilding, knife crime and new technologies. The heads of maintained nurseries marched on Downing Street earlier this week calling for more funding. There was also no new money announced for schools. School heads wrote to parents at the end of last week about cuts in their funding which means some are having to close early or cut back teaching assistants and the subjects they offer.
Neil Leitch, chief executive of the Early Years Alliance, said: “Many providers will be incredibly disappointed that the Chancellor has yet again missed an opportunity to tackle the early years funding crisis, especially those wondering how they will survive past April’s minimum wage and pension increases.
“While ministers continue to claim that all is fine in the sector, the simple fact is that even the government’s own research – which doesn’t take into account these upcoming cost increases – shows that a large proportion of parents are paying increasing fees as a result of underfunding, while many local authorities have warned that current funding levels are unsustainable.
“It beggars belief that the government is walking a sector as vital as the early years to this cliff edge – but that’s what is happening with their refusal to budge on frozen funding levels even as outgoings soar. With report after report of quality providers being forced to close their doors for good, it’s vital that the government takes urgent action on this issue – the sector cannot afford any further delay.”
The EYA says that, without extra funding, nurseries may have to raise childcare fees or close.