Chancellor Jeremy Hunt announced his Autumn Statement yesterday. Which included measures to support those most in need, a cap on social rents and an additional £6bn funding boost to deliver energy efficiency and tackle fuel poverty. But does it deliver? Here we share opinion from across the sector.
Councils want to work with central government to develop a long-term strategy
Responding to the Autumn Statement announced by the Chancellor, Cllr James Jamieson, Chairman of the Local Government Association, said: “Local government is the fabric of the country, as has been proved in the recent challenging years we have faced as a nation. It is good that the Chancellor has used the Autumn Statement to act on the LGA’s call to save local services from spiralling inflation, demand, and cost pressures.
“While the financial outlook for councils is better than we feared next year, councils recognise it will be residents and businesses who will be asked to pay more. We have been clear that council tax has never been the solution to meeting the long-term pressures facing services — particularly high-demand services like adult social care, child protection and homelessness prevention. It also raises different amounts of money in different parts of the country unrelated to need and adds to the financial burden facing households.
“The revised social rent cap is higher than anticipated next year but councils will still have to cope with the additional financial burden as a result of lost income. Councils support moves to keep social rents as low as possible but this will have an impact on councils’ ability to build the homes our communities desperately need — which is one of the best ways to boost growth — and retrofit existing housing stock to help the Government meet net zero goals.
“Financial turbulence is as damaging to local government as it is for our businesses and financial markets and all councils and vital services, such as social care, planning, waste and recycling collection and leisure centres, continue to face an uncertain future. Councils want to work with central government to develop a long-term strategy to deliver critical local services and growth more effectively. Alongside certainty of funding and greater investment, this also means wider devolution where local leaders have greater freedom from central government to take decisions on how to provide vital services in their communities.”
NHF supports government’s decision to cap social rents
Kate Henderson, Chief Executive of the National Housing Federation, said: “Housing associations are deeply aware of the financial pressures facing their residents. The sector has made a commitment that no tenant will be evicted because of financial hardship where they are engaging with their housing association. Each housing association also has tailored support in place to help residents who are struggling with the cost of living.
“The National Housing Federation supports the Government’s decision to cap social rent increases at 7% in 2023/24. We are also very pleased that the government has announced an exemption from the rent cap for supported housing providers, which will ensure the future viability of care and support for some of the most vulnerable people in the country. The overwhelming majority of tenants who use these specialist services will have their rent increase met in full by housing benefits or Universal Credit.
“With the certainty these decisions provide, housing associations representing 80% of shared ownership homes are also committing to cap rent increases for shared owners at 7% in 2023/24, matching the social rent cap.
“The extra £6bn for energy efficiency measures is a welcome and necessary step which will help housing associations in their mission to decarbonise their homes. We are also pleased to see additional funding pledged for tenants who use alternative fuel types, which we have been engaging with government on.
“We know any additional costs will be difficult for residents. We strongly welcome the government’s decision to increase benefits by 10.1%, something we’ve been calling for. We urge tenants and shared owners who are struggling with bills to contact their housing associations to find out what support is available.”
Action to support those most in need welcome
Chartered Institute of Housing (CIH) Chief Executive, Gavin Smart said: “We’re pleased to see the Government taking action to support those most in need via additional cost of living payments and support with energy bills from next April. We welcome confirmation that benefits will not be cut next April but uprated in line with September CPI, along with an increase to the household benefit cap. Those on the lowest incomes will still face considerable pressures this winter however, so we believe there is a strong case for the benefit uprating to be brought forward from April. Households who have faced a real terms benefits cut cannot wait for the system to catch up.
“On social rent setting, we support the Government’s decision to cap rents at 7% and to exempt social housing providers, recognising that 7% is a maximum limit and not a target. Housing providers will need to look hard at whether they can set rents below this. As we set out in our consultation response, any related benefit savings generated by this cap (HM Treasury estimate £135m next year) should be used to support tenants and residents with cost of living pressures.
“We are disappointed that the Chancellor did not use this opportunity to restore local housing allowance to the 30th percentile, as we had called for. The decision to leave rates frozen at 2020 levels means that the affordability gap for private renters will only grow, ultimately resulting in increased homelessness. We would urge government to look again at this.”
Uprating of social security in line with inflation doesn’t go far enough
The Scottish Federation of Housing Associations (SFHA) has welcomed plans for welfare benefits to keep pace with inflation but expressed concern that other measures announced as part of the UK Government’s Autumn statement don’t go far enough to protect social housing tenants during an unprecedented cost-of-living crisis.
Earlier this month, an SFHA survey of members reported high demand for foodbank referrals and emergency fuel vouchers, including from tenants who are in work. As a result, SFHA reiterated calls for changes to the UK social security system, including increasing social security in line with inflation and removing the benefit cap and the two-child limit. While Thursday’s budget confirmed that benefits and the cap would rise with inflation, the benefit cap and two-child-limit will remain in place.
The Chancellor also announced that the Energy Price Guarantee would continue past April, providing some certainty on energy costs. However, this results in the new rate for a typical dual fuel bill being £3,000, representing a significant increase of over 160% from the April 2021 rate of £1,138. Those reliant on electricity for heat will face even higher costs and there remains uncertainty around the future of the non-domestic Energy Bills Relief Scheme and the impact on ‘Heat with Rent’ customers, as well as social landlords’ wider operating costs.
Sally Thomas, CEO of SFHA, said: “While we welcome the UK Chancellor’s announcement on an increased windfall tax for energy firms and increased investment in energy efficiency from 2025, the statement confirms that the support for energy bills will become less generous from April.
“In that context, while the uprating of social security in line with inflation will provide some help those most in need, it simply doesn’t go far enough. With soaring food and fuel costs, the benefit cap and the two-child-limit should have been removed as a minimum. Housing associations and co-operatives will always provide help to tenants who are struggling financially, but there must be significantly more support from the UK Government.”
Reduction in local budgets could hinder the effects of regeneration
Mark Robinson, Group Chief Executive at SCAPE, one of the UK’s leading public sector procurement authorities, said: “While they will go some way to addressing the Treasury’s deficit, the timing of the £30bn of spending cuts makes them all the more challenging as the UK heads toward recession. Public sector investment in infrastructure has been a major driver of growth since the pandemic and any reduction in local budgets has the potential to hinder the effects of regeneration.
“Existing funding pots such as the Levelling Up and the Towns Fund will now become even more important in supporting the progress of major projects for both commissioning local authorities and those contractors who target public sector work. Applying for central funding remains a competitive business though and as we head into what is likely to prove a challenging winter, early engagement between both local authorities and contractors can only prove beneficial in making sure projects are planned effectively to overcome any budgetary constraints.”
Borough finances set to ‘remain in a critical condition‘
Cllr Georgia Gould, Chair of London Councils, said: “Borough finances remain in a critical condition. Before today’s statement from the chancellor we estimated a £700m shortfall next year for councils in the capital, which means a bleak future for many of the local services our communities rely on.
“Council tax is not the answer to the inadequate funding we’re grappling with. Council tax rises during a cost-of-living crisis are extremely difficult for the struggling households we’re determined to support. But even if council tax goes up, it could never plug that £700m funding gap.
“Boroughs need proper investment from the Government. Just as ministers worked in partnership with councils during the Covid-19 pandemic, we now require similar support in the face of the current economic emergency. We stand ready to work together in finding a sustainable solution that protects local services, helps Londoners through cost-of-living pressures, and secures the economic growth we all want to see.”
London Councils’ analysis ahead of the Autumn Statement showed boroughs in the capital face a funding gap of £400m this year (2022-23) and £700m next year (2023-24).
Local authorities are highly dependent on central government funding and there are no realistic options for boroughs to raise the £700m through other means. If boroughs were to try generating the £700m from London’s council taxpayers, council tax bills would need to rise by around 18%.
There are strict legal limits on local authorities raising council tax. Before the changes announced by the chancellor at the Autumn Statement, London boroughs could only raise council tax by 2.99% and would need to hold a referendum to go above that.
London Councils’ calculation of a £700m funding shortfall next year already factors in an anticipated increase in council tax revenue. The cross-party group estimates that the government permitting council tax increases of 5% could still only close the gap by £80m, if boroughs chose the new maximum increase.
London Councils wants to see significant reform of local government finance so that boroughs have more resource-raising flexibilities and are less reliant on central government funds and council tax.
Mixed blessings for Greater Manchester
Mayor of Greater Manchester Andy Burnham said: “The Autumn Statement brought mixed blessings for Greater Manchester. On a positive note, I am encouraged by the Chancellor’s commitment to a new devolution deal for our city-region. We’ve worked hard to make the case for greater powers over housing, skills and transport and a single, block grant similar to Scotland and Wales. This would represent a major strengthening of devolution in England and the fact that the Government is looking positively at these proposals is itself a significant vote of confidence in what Greater Manchester is achieving.
“Of more concern is the Government’s second retreat on its promise to build Northern Powerhouse Rail in full. This was promised in the Manifesto, watered down in the Integrated Rail Plan, promised again by the previous PM and today withdrawn again. The North deserves much better than being given the run around like this. A new rail line across the North of England via Bradford is the single most important infrastructure investment this country needs and we ask the Government to sit down with Mayors and Leaders to discuss ways in which we can achieve it in full.
“The single biggest unresolved issue is public sector pay. We are facing a long, difficult and potentially dangerous winter and cannot afford to have our emergency service workers forced to take action to protect their living standards due to the lack of a fair pay settlement. Simply passing the buck to local employers on issues like firefighters’ pay is an abdication of responsibility. It will put even more pressure on the Council Tax, already under strain from today’s announcements on social care, and that will hit the poorest hardest. It is the Government’s job to guarantee the continuity of our emergency services this winter and we need them to negotiate practical solutions with workers and trade unions.”
Government urged to expedite plans to speed up planning process
Paul Breen, Managing Director of affordable housing specialist Living Space Housing, said: “The months ahead are going to be incredibly challenging for consumers which means additional pressure on affordable housing providers to support their customers more than ever before. The extension of the windfall tax will provide some respite — as will the social rent increases being capped to 7% in 2023.
“There’s no doubt that the new Government needed to intervene in a big way to protect the most vulnerable in our society. There was a fine balance to be struck here to not only shield tenants from the forecasted 11% hike, but to not cut providers income steams so drastically that new development would grind to a halt. I believe the Chancellor has largely got this balance right to ensure much-needed investments in new, affordable homes continue next year.
“To support the industry, I urge the Government to expedite any plans it has in the works to speed up the planning process for affordable homes. Either way, this remains a time for the industry to collaborate, pool resources and find further solutions to weather the storm.”
Additional £6bn to energy efficiency and to tackle fuel poverty welcome
David Morgan, Executive Managing Director at Wates Property Services said: “We welcome the news from the Autumn Statement that the Government will commit a further £6bn to energy efficiency and to tackle fuel poverty. But it’s essential we have a holistic approach to buildings. Approximately 80% of our current buildings will still be around in 2050, and we need to focus on both the domestic sector as well as the non-domestic sector, where 89% of buildings need to be retrofitted by 2030.
“At Wates we have delivered over 20 PAS 2035 compliant domestic retrofit schemes to date, installing energy efficiency measures in nearly 3,000 homes and we will soon be announcing our first PAS 2038 commercial retrofit project. We’ve also built a supply chain with the capacity to deliver retrofits to 100k homes over the next two years.
“This additional funding will significantly boost the important work being done by social landlords to decarbonise the millions of social housing properties across the UK, as well as provide the focus required by non-domestic landlords to decarbonise their portfolios and transition to a low-carbon future. This funding will also bolster the government’s latest round of Social Housing Decarbonisation Fund by providing much needed continuity in funding.
“What we need to see now, from the Government and across our industry, are measures to support the necessary growth of the green supply chain, enhanced capital allowances for retrofit and investment in the skills needed to deliver on these ambitions.”
Chancellor’s Autumn Statement could signal the most important boost to energy saving in years
UK Green Building Council‘s (UKGBC) Director of Communications, Policy and Places, Simon McWhirter said: “This could signal the most important boost to energy saving and reduced energy bills in many years. The shift to make energy saving an equal priority with energy supply, setting a clear level of ambition and path forwards for industry, and new government funding could be the turning point needed.
“Getting the details and wider strategy right will be critical; but this is progress in the right direction. The new task force to advise Government is welcome news. Bringing in experience from across industry, academia and civil society will be essential to make this a success, and learn from the mistakes of the past.
“The plan now needs to reflect the required urgency of the fuel poverty, cost of living and climate emergencies. Public funds must be prioritised for households struggling with bills, and boosting local authorities’ capacity to play centre stage in helping drive energy savings across the country.
“To succeed in a ‘shared mission with families and business’, targeting a whole-nation approach more funding will be needed — as well as complementary long term policies including incentives for owner occupiers and stronger minimum standards for the private rented and commercial sectors. The size of the prize is enormous, in terms of new and secure skilled jobs, accelerating levelling up across the country and scaling up the green economy.
“Fundamentally changing Investment Zones is the right thing to do; otherwise this sort of deregulatory approach risks a race to the bottom on planning and environmental protection, and it won’t deliver the high-quality and low-impact new homes and buildings the country so badly needs. Our members have shown that we can already build low carbon, nature-friendly homes. Anything else puts the next generation of new homeowners at risk of sky-high energy bills in places that don’t give us the wider access to nature and green spaces that we need to thrive.
“Secretary of State Michael Gove has reassured us that “there is no way we are undermining our environmental protections”. The test will be in the details to be announced ahead of the Spring Statement.”
Difficult balancing act for housing associations
Jonathan Pearson, Director at Residentially said: “In the current economic climate, a rent cap of anything more than 3% is good news for the housing associations I work with and should be prudently welcomed across the sector. There is of course a difficult balancing act when it comes to protecting tenants against rising costs whilst providing housing associations up and down the country with some of the certainty they need to maintain their current homes and services and crucially, invest in much-needed new affordable housing developments. Without this investment, thousands more homes cannot be built and too many more people will be left in desperate housing need.”
We much hope 2023 will deliver some economic stability
Paul Woodward, Finance Director for Dorset-based affordable housing specialist AJC Group, said: “It was encouraging to hear Jeremy Hunt start his Autumn Statement speech with a promise to prioritise stability, growth, and public service. The 7% rent cap for the social rent sector will hopefully not stifle growth at a critical point for this sector.
“First time buyer properties will now only be Stamp Duty exempt up to £425,000 until 2025. This is disappointing, as we have already seen signs that this recently introduced measure is helping hard-working people to get a foothold on the ladder.
“With the Energy Price Guarantee rising to £3,000 for the average household from April, there should be a huge focus on delivering highly energy-efficient new homes and retrofitting existing housing stock. However, the UK’s broken planning system — and the prolonged debacle to determine phosphates, nitrates and nutrient neutrality — means a green light for new development is few and far between.
“For developers such as us who do have live sites, the cost of delivering much-needed EPC-A and B rated homes has sky-rocketed. We are currently delivering 230 affordable, open market, and build-to-rent homes at seven sites across the Wessex region. The cost of labour, materials, plant, and machinery is incomparable to the original budget forecasts. We are very aware of how much this uncertainty is slowing down housebuilding across the country.
“The newly announced tax increases in real terms for workers and businesses will further hinder growth. For the foreseeable future, we will continue to pay all AJC Group employees a £200 per month cost of living bonus, to help meet the rising cost burden every household is currently facing.
“In the wake of such an eventful geo-political climate and a cost-of-living crisis, we very much hope 2023 will deliver some economic stability, so that the UK can climb out of recession. The affordable and private sector housing industry needs the confidence to progress with investment decisions and continue to strive towards delivering the 300,000 new homes per annum that the UK desperately needs.”
Industry reaction to the newly announced energy efficiency push…
Carl Arntzen, CEO of Worcester Bosch said: “The announcement to double the Government’s energy efficiency investment with an extra £6bn from 2025 — and estimated saving of £450 per household on their bills as a result — is an investment the heating industry has been calling for. This is a small step in the right direction.
“We would expect the priority will be to use these funds to support the most vulnerable as well as small businesses, but with another expected round of tough cuts to come in April, we hope this is not just a half-hearted quick fix to a long-term problem.
“What we need now from BEIS is a comprehensive strategy from the new task force that extends on today’s plans. One that clearly shows thinking on how to better heatproof our houses and businesses, by embracing the development of new technologies and implementation of essential equipment upgrades.
“As an industry leader in the home heating sector, we realise the struggles millions of Brits will face paying bills. The announcement is progress but we now need the Government to look long-term to how we can protect and serve homeowners long in the future with this new injection of funds and energy efficiency taskforce.”
