Shadow chancellor calls on government to use autumn statement’s ‘fiscal headroom’ to protect the elderly and the vulnerable

This article is more than 3 years old

This article is more than 3 years old

John McDonnell is demanding that Philip Hammond finds more than £1bn from within the government’s emergency budget plan to rescue Britain’s ailing social care system.

The shadow chancellor says the money could come from the “fiscal headroom” left by the chancellor in the autumn budget. The money has been put aside in case of a financial emergency caused by Brexit, reports have claimed.

The demands are meant to increase pressure on Theresa May’s government to step in with emergency funding to protect elderly and vulnerable people.

In a letter sent to Hammond on Sunday, seen by the Guardian, the shadow chancellor wrote: “Independent estimates by health care charities put the minimum cost of resolving the immediate crisis over this year at £1.9bn. The funding announced by your government covers only a quarter of this.

“As you are aware, the necessary funding could be provided to social care and you would remain well inside your own target for deficit reduction, set at 2% of GDP in 2020-21.

“With political will, the crisis can be resolved.”

On Thursday, the government announced that council tax would be allowed to rise faster than expected – by about £46 a year for an average home – to bail out struggling social care services for the elderly and vulnerable in England.



It follows concerns that residential care homes are closing at an unprecedented rate, while hospitals are logjammed with elderly patients with nowhere to go.

Local authority cuts have left more than a million people in need of assistance in their homes, charities have claimed.

May’s government has been accused of failing to respond adequately to a growing crisis in the sector, which has suffered huge cuts at a time of rising demand.



According to the shadow chancellor’s officials, the new fiscal deficit outlined by the chancellor in the autumn statement gives more “fiscal headroom” to raise spending in case of a downturn.

The Office for Budget Responsibility (OBR) estimates this fiscal rule gives the government scope for nearly 2.5% of GDP, or £56 billion, more structural borrowing in 2020-2021. Sources close to McDonnell said it leaves scope for borrowing of 1.2% of GDP, or around £26bn.

It has been reported that this “fiscal headroom” had been left by Hammond in case the negative impact of Brexit was worse than OBR estimates.

McDonnell’s letter follows a request from Jeremy Corbyn on Saturday for urgent cross-party talks on how the government might avert the deepening crisis in social care this Christmas.



A government spokesperson said: “On Thursday, the government announced almost £900m of additional funding over the next two years to tackle these growing pressures.

“However we know that money alone is not the solution. There is a diversity of provision across councils, with many already providing high-quality social care services within existing budgets.”