On Wednesday (23rd March) Chancellor Rishi Sunak unveiled his Spring Budget. With the ‘cost of living crisis creating a perfect storm of financial hardship’, how will the Spring Statement affect those most in need? And with net zero targets on the horizon, local authorities and housing associations delivering energy efficiency retrofits at scale are looking for more funding and policy direction. Does the Spring Statement deliver, or was it a missed opportunity? Here we garner opinion from across the sector.
Perfect storm of financial hardship
Nicholas Harris, Chief Executive at leading housing provider Stonewater: “The cost of living crisis we currently face is creating a perfect storm of financial hardship with those least able to withstand its impact, affected most. Stonewater is committed to delivering more genuinely affordable social homes and decarbonisation is at the heart of this as part of our work to ensure that everyone has the opportunity to have an energy-efficient, warm and affordable place to call home. The’s announcements in the Chancellor’s Spring Statement are welcome but fall short of what is needed to support many families who see the gap between their income and even the most basic of outgoings increasing at an alarming rate.
”Housing associations are uniquely placed providing homes and support to almost six million people around England, but we need to be able to do more. We need the Government to work more closely with the sector to ensure they have what we need and can share best practice on supporting customers through these difficult times.
“Last year, Longleigh, our grant-making charitable foundation experienced a 96% year-on-year increase in the funding provided for its individual hardship grants. In response to an increase in the number requests for support from Stonewater customers who needed our help to make ends meet. As the cost-of-living crisis worsens, it seems that it will once again fall to understanding landlords and charitable organisations, to provide a much-needed safety net for many households.”
Regarding the reduction in fuel duty, Nicholas said: “We welcome today’s announcement that fuel duty will be cut by five pence per litre, as part of a package of measures to ease the cost-of-living crisis. For many of our customers, especially those that live in rural communities, the soaring cost of petrol and diesel is yet another additional pressure on their already stretched finances. Access to regular and reliable public transport is not always available and those hit hardest by prices at the pumps are the least likely to be able to afford to own a newer, more fuel-efficient petrol or electric vehicle.
“We know our reliance on carbon-based fuels for heating our homes and powering our vehicles is not sustainable in the face of the climate emergency. Longer term, if we are to achieve the Government’s net zero targets, we need the infrastructure, government policy and funding to be in place to support organisations like Stonewater to meet the challenge. Including measures to encourage the reduction in the cost of electric vehicle ownership to support a reduction in our reliance on carbon-based fuels.”
‘The cut in VAT when investing in energy saving measures recognises the need for immediate action to make homes more fuel efficient. However, housing associations like Stonewater with well advanced plans to retrofit homes at scale need funding from government and clearer policy direction on sustainable energy solutions.
Commenting on the rise in National Insurance threshold, Nicholas said: “The Chancellor’s announcement that the National Insurance threshold will increase to £12,570 from July 2022, a tax cut of £330 a year for employees, will mean that 70% of working people will have their taxes cut by more than they will pay in the new Health and Social Care Levy.
“However, with inflation today at 6.2%, price rises of basic food items at double digits, the current cost-of-living crisis is biting ever deeper. Although not expected today, we are disappointed not to see an announcement on funding for the provision of more affordable homes. Today’s latest housing affordability statistics show that the gap between the cost of housing and incomes widens. We urge the Government to not lose sight of the shortage of good quality affordable homes and maintain a focus on the ongoing housing crisis.
Missed opportunity
Mark Perry, Chief Executive at VIVID commented: “The Chancellor’s announcements today are a disappointing response for those most severely affected by what’s been described as the cost of living crisis. This is a missed opportunity. Whilst the increase in national insurance threshold and fuel duty reductions might help those in work, those that aren’t working won’t see any of the benefits. I think the OBR has suggested that in real terms it forecasts the highest reduction in disposal income since record began, in 1950!
“With the economy £20bn ahead of where we expected it to be, surely the government could have used some of that to help those most struggling. Perhaps reinstating the £20 per week Universal Credit cut that took place last year, basing the inflation rate used to uplift benefits to the position it is now at 6.2%.
“The measures announced today won’t really help the reality of what our customers are experiencing when say their small £20 per week budget for food and household essentials used to get them 20 items and will now only just stretch to 17. More needs to be done.”
Councils best placed to help
Jonathan Carr-West, Chief Executive, LGIU said: “Councils are deeply involved in the cost of living crisis. They have a duty to nurture and support the small businesses that make thriving high streets and vibrant places. They support families and individuals who are struggling to get by. They are there to pick up the pieces when things go wrong. And, of course, public services are also affected by rising energy costs and rising employer’s National Insurance contributions.
“Any measures that alleviate rising costs for businesses or for families are good news for local government. It’s right that the Chancellor acknowledged that councils are best placed to help those in their areas who need it most and put more money into the household support fund.
“However, local government will be concerned that the headline measures in today’s Spring Statement (a reduction in fuel duty and a rise in the national insurance threshold) will fail to reach the exact households that local government provides the most support to.”
Increased funding to support domestic energy efficiency needed
Mark Robinson, Group Chief Executive at leading public sector procurement authority SCAPE, said: “Despite strong tax revenues and a fall in borrowing, its ‘Budget-lite’ billing meant that the Chancellor’s statement was always likely to be lean on new spending. Critically, though, the public purse remains in a strong position to continue delivering the infrastructure investment needed to support local regeneration while addressing the cost-of-living crisis.
“As part of this, we need to see increased funding to support a nationwide approach to domestic energy efficiency — something we are actively campaigning for alongside the UK Green Building Council. All eyes will therefore be turning to the Prime Minister’s national energy strategy for clear direction on how the government intends to address long-term cost pressures within the construction industry.”
Strategy needed for those struggling the most
Commenting on the Chancellor’s Spring Statement, a Spokesperson from the Centre for Social Justice said: “We welcome the measures the Chancellor announced to shield those on lower incomes from the impact of the National Insurance rise. But the reality is this cost of living crisis is just getting started — and we needed to see a strategy for those struggling the most.
“Universal Credit remains the best weapon in Government’s arsenal to get support directly to those who will be worst hit by the spike in energy prices, while also helping claimants into work.
“Building on the profoundly welcome cut to the taper rate at the Autumn Budget, the Government should further harness the flexibility within UC to help those furthest from the labour market by uprating benefits more dynamically to energy costs and the wider cost of living.
“Doubling the Household Support Fund will help some families receive essential items. But we must be more ambitious for those on the lowest incomes, and we have a system in place to offer the most vulnerable a hand up.”
VAT cut on energy efficiency measures a welcome step, but more investment support needed
Responding to the Chancellor’s Spring Statement, UKGBC’s CEO, Julie Hirigoyen said: “The VAT cut to energy saving measures is a first step towards reversing the 70% collapse in the number of energy efficiency measures installed in our homes over the last nine years. Together with 28 prominent business leaders, UKGBC wrote to the Chancellor ahead of the Spring Statement calling for this VAT cut, amongst other measures, and we’re pleased Mr Sunak was listening on this point.
“Whilst only a small step, it sends a useful signal to industry and households and will simplify what is currently a complex system for installers to navigate. But the major barrier to large-scale action to upgrade the country’s draughty homes is still the Government’s lack of serious funding, financial incentives and a national plan. This should start with fulfilling the 2019 election promise to spend £9.2bn on existing successful schemes for low income and social housing. We need to see an expansion of the small-scale Boiler Upgrade Scheme, a successor to the Green Homes Grant Scheme and long term financial drivers such as a green stamp duty.
“A big piece missing from the Spring Statement was significant immediate support for the over six million households who will be gripped by the fuel poverty crisis from April. Helping households to cut energy waste and switch to clean energy is the best way to lower their energy bills for good. UKGBC’s Net Zero Whole Life Carbon Roadmap demonstrates that a national programme of home retrofit could save on average £430 per home on their energy bills, releasing vital disposable income to vulnerable households.
“With energy bills set to soar further in Autumn, much more Government support is urgently needed to invest in the longer term energy efficiency solutions. The Prime Minister still has an opportunity to put this at the heart of his forthcoming British Energy Security Strategy. Government investment in domestic energy efficiency can quickly become self-financing, it’s the common-sense response.”
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