This week, the European Council has published the EU’s draft guidelines outlining its position on the future relationship between the UK and the EU. The guidelines emphasised that, as a result of the UK’s demands to leave the single market, the customs union and the jurisdiction of the European Court of Justice, the only economic relationship that is possible after Brexit is a free trade agreement. It also repeated the EU’s assertion that the UK cannot “cherry-pick” having access to certain sectors in the EU market, such as financial services, without accepting free movement of people.

Talks on NHS staff pay rise make progress

The Guardian has reported that significant progress has been made on finalising a pay increase for NHS staff of 3% this year and 1-2% over the next two years, which would equate to a 6.5% increase over three years. Reports initially suggested that this would be in return for staff losing a day’s holiday each year – which would effectively reduce pay packets by 0.4% even with the salary uplift – but these suggestions have now been described as “premature”.

The pay rises would be in line with the NHS’s Agenda for Change and so would boost pay for workers at the bottom of the NHS’s nine pay scales the most, with some staff potentially seeing increases of up to 10%. The 14 health unions which have been involved in the negotiations are thought to be enthusiastic about the proposed terms and have confidence that their members will endorse it. The Chief Executive of the Nuffield Trust, Nigel Edwards, said “With very serious shortages of staff, government is right to conclude that an austerity approach to the NHS workforce has reached its limits.”

However, the Director of Research at the Health Foundation, Professor Anita Charlesworth, also highlighted that working conditions and work-life balance are important in recruitment and retention issues, arguing that “Any proposals on pay will need to be part of a wider programme to support nurses.”

NAO publishes report on financial sustainability of local authorities

The National Audit Office (NAO) has published a report on the financial sustainability of local authorities, warning that one in ten local authorities are facing running out of money due to the
pressures of social care funding. The report highlights that there was a 3% reduction in real-terms spending on social care services by local authorities between 2010/11 and 2016/17, although this compared with a 32% reduction in spending on non-social care services over the same period. This included a 31% real-terms reduction in spending on children’s and families’ services beyond children’s social care and safeguarding services. The report also highlighted that there is evidence that funding pressures in local authorities are “adding to pressures within the wider health care system and adult care provider markets.”

Responding to the report, the Local Government Association labelled its findings “stark” and said “The Government needs to urgently address this cliff-edge and the growing funding gaps facing local services.” The chair of the Public Accounts Committee, Meg Hillier MP, also highlighted that “Many councils are raiding their rainy day funds to pay for social care, and we have seen Northamptonshire reach the brink of financial failure.”

Chancellor prepares for Spring Statement

It has been reported that the Chancellor will receive a short-term upgrade to the UK’s economic forecast from the Office for Budget Responsibility (OBR) in next week’s Spring Statement. The Resolution Foundation estimates that the public finances could be between £7 billion and £11 billion better than expected, in contrast to the economic downgrade which was given during the Autumn Budget in November. The Treasury has repeatedly emphasised that the speech will only cover th country’s economic outlook and not include any policy announcements.

The OBR is also expected to set out the estimate of the UK’s yearly payments to the EU after Brexit, which have previously been estimated as totalling anywhere between £22 billion and £65 billion. The exact payments have yet to be calculated but estimates can be taken including the UK’s payments up to 2020 and pension liabilities. A spokesperson for the OBR said that “Where we don’t have a final decision from the negotiations on the future relationship, we will continue to use a broad brush assumption.”