Sector responds to Spring Budget

Sector responds to Spring Budget

Here, LABM shares opinion from industry bodies, social and affordable housing providers and the public sector to Chancellor Jeremy Hunt’s Spring Budget 2024.

Councils need greater funding certainty through multi-year settlements
Cllr Shaun Davies, Chair of the Local Government Association, said: “We are pleased the Chancellor has extended the Household Support Fund (HSF), which has helped millions of households facing hardship. It is disappointing that we had to wait until the very last minute for an extension, and that it is only for a short period. Three-quarters of councils expect hardship to increase further in their area over the next 12 months.

“The Government needs to use the next six months to agree a more sustainable successor to the HSF. Councils need certainty and consistent funding to efficiently maintain the staff, services and networks that help our most vulnerable residents. Without this we risk more people falling into financial crisis as we head into winter.

“It is disappointing that the Government has not announced measures to adequately fund the local services people rely on every day. Councils continue to transform services but, given that core spending power in 2024/25 has been cut by 23.3% in real terms compared to 2010/11, it is unsustainable to expect them to keep doing more for less in the face of unprecedented cost and demand pressures.

“Councils of all political colours are starting this financial year in a precarious position, and having to scale back or close a wide range of local services, so the continued squeeze in public spending in the years ahead is a frightening prospect for communities.

“This year also saw the sixth one-year settlement in a row for councils. Keeping them on a financial drip feed in this way has led to the steady weakening of local services. Councils need greater funding certainty through multi-year settlements to prevent this ongoing decline but also to ensure key national government policies — such as boosting economic growth, creating jobs and building homes — can be achieved.”

Missed opportunity to address the housing emergency
Kate Henderson, Chief Executive of the National Housing Federation, commented: “We’re disappointed that this year’s budget was not used as an opportunity to address the housing emergency and chronic shortage of affordable homes across the country.

“The measures announced by the Chancellor to support families on the lowest incomes, including the extension of the Household Support Fund are welcome and will provide some relief for those who are struggling with the rising cost of living. However, with child homelessness at record levels and one in six children growing up in overcrowded homes with little space or privacy, urgent and meaningful action on housing is needed.

“This housing crisis can be solved but it requires a change of approach. The Government must put an end to short-term thinking and piecemeal policy decisions and commit to a national long-term plan for housing which aims to deliver the secure, affordable, high-quality homes local people need.”

Urgent action needed to boost social housing supply
Gavin Smart, Chartered Institute of Housing Chief Executive said: “From a housing perspective, this was a disappointing budget. Given the significant housing crisis that we’re currently navigating there was no mention of the urgent action needed to address this.

“There were some welcome announcements to help support people in debt, such as the temporary extension of the Household Support Fund, which we had called for, and the abolition of the Debt Relief Order charge, but they won’t bring down rising housing costs.

“In our pre-Budget submission we called for urgent action to boost social housing supply, invest in homelessness prevention and decarbonise the residential sector. These calls remain and we’ll continue to push the Government to go further. We need a sustainable housing system to support a vibrant economy.”

The Housing Forum says well-funded local authorities are needed to develop local plans
The Housing Forum welcomes the £240m announced to unlock housing in Barking and Canary Wharf, and also the second round of funding to address the nutrient neutrality issue blocking new homes. It was disappointing not to see any other significant new funding announced for housing in today’s budget.

The housing sector has been struggling with market downturn and a raft of new regulations, making it more expensive and difficult to build new homes. The Government is on course to miss its own target of 300,000 new homes a year, and there was nothing today to suggest any plan to remedy this situation. The Housing Forum’s proposals for a £4bn fund for affordable housing would enable the 60,000 households currently in temporary accommodations to have a home of their own, reducing costs for local authorities’ hard-stretched budgets and helping the housing and construction sector to retain capacity to accelerate in the future.

We’re also very concerned about the funding cuts proposed to unprotected departments like the Department for Levelling Up, Housing and Communities, over the coming years. Even more worrying is the lack of support for local authorities, many of which are on the verge of issuing Section 114 notices. Well-funded local authorities are needed to develop local plans and build much needed social housing, if councils are left in the lurch then housebuilding will decline yet further.

London Councils says budget leaves borough finances under “relentless squeeze”
Boroughs across the capital will continue to face a “relentless squeeze” on their finances, London Councils has warned following the Budget announcement. The announcements made by the Chancellor bring “little short-term relief and no long-term solutions” to the crisis in council finances, according to the cross-party group.

While welcoming the Chancellor extending the Household Support Fund – which was due to end by April and had been a top Budget priority for London Councils — the decision to continue the fund for only a further six months risks reducing support for low-income Londoners just as winter approaches.

London Councils previously highlighted how boroughs used the fund this year to arrange 472,000 meals for children from low-income households during the school holidays and gave emergency food support to 218,000 families.

Boroughs are particularly concerned by the Budget’s lack of action on homelessness. Amid a worsening national homelessness crisis, London faces the most severe homelessness pressures in the country.

One in 50 Londoners is currently homeless, with boroughs collectively spending £90m each month on temporary accommodation for homeless residents. Boroughs point to the “bankruptcy risk” this poses to town halls in the capital.

London Councils’ analysis shows that boroughs will face a shortfall of at least £400m in the coming year, brought about by skyrocketing demand for services, spiralling inflation, and many years of insufficient government funding.

The umbrella body points to the 15% reduction in boroughs’ overall level of resources since 2010, even though the capital’s population has grown by 800,000 over the same period. Boroughs have also reduced staff numbers by 25% and made major efficiency savings to protect statutory services such as social care and homelessness support.

Cllr Claire Holland, Deputy Chair of London Councils, said: “The relentless squeeze on borough finances looks set to continue.

“We’re pleased the Chancellor listened to the call made by councils and charities for an extension to the Household Support Fund. This fund enables us to provide vital assistance to low-income Londoners struggling with the cost of living. However, the extension is only for a further six months. This means less help for vulnerable residents just as the difficult winter months approach.

“Overall, we are left with little short-term relief and certainly no long-term solutions to the crisis in council finances. The fundamental factors driving this are the fast-rising levels of demand for services and the substantially reduced levels of resources available to us. Boroughs will continue to call for urgent reform of the local government funding system.”

UK100 bemoans the lack of focus on Net Zero, despite the Chancellor reiterating the importance of growth and productivity
Reports show the Net Zero economy grew by 9% while overall GDP grew by just 0.1% in 2023. UK100 Chief Executive, Christopher Hammond commented: “The Budget barely mentions Net Zero. Despite all the evidence demonstrating the path to productivity and growth runs through local Net Zero, with the sector far outperforming the wider economy last year. Meanwhile, as the Chancellor rightly said, productivity-boosting dynamism doesn’t come from Ministers in Whitehall, it comes from our communities. But right now local councils and communities are hamstrung by an uneven approach to devolution and piecemeal funding schemes that are needlessly bureaucratic.”

The network had previously called on the Chancellor to focus on long-term investment in public services, including local-led efforts to deliver warm homes as the fuel poverty crisis continues to deepen. Christopher continued: “As we go into spring, we mustn’t forget the rising numbers of people in fuel poverty and the millions who were unable to keep warm over the winter. Despite the issue getting little attention in the Spring Budget, everyone deserves a warm, affordable to run home, but for far too many households the reality is anything but.

“The Government spent £40bn subsidising everyone’s energy bills, but under the current fiscal rules, it is unlikely to be able to afford so again. National politicians can’t kick fuel poverty into the long grass in favour of short-term electioneering without storing up long-term problems.

“Rather than waiting until we’re again in crisis, the Spring Budget should have been a chance to accelerate retrofit projects that local leaders can unlock as the fastest, most cost-effective route to delivering warm homes for all.”

Despite lacking broad public support, UK100 had called on any tax cuts to be narrowly targeted at energy efficiency and removing barriers for ambitious councils leading delivery. The specific tax and policy changes proposed by UK100 and not taken up by the Chancellor included:

  • Introducing variable stamp duty rates to incentivise energy efficient homes
  • Making permanent the 5% VAT reduction on retrofitting homes
  • Lifting restrictions on councils’ ability to set higher new-build standards, and implementing recommendations in UK100’s Powers in Place report

Budget fails to address the national emergency in the state of local government finances
Mayor of Greater Manchester, Andy Burnham commented: “The Chancellor deserves some credit for extending the Household Support Fund in the Budget. As Metro Mayors we joined more than 170 councils in calling for an extension to the Fund, which has been a lifeline for thousands of people in Greater Manchester during the cost-of-living crisis.

“There were also further positive announcements on devolution, with a trailblazer deal for the North East and steps towards devolution in regions in the South.

“But this Budget failed to acknowledge or address the national emergency in the state of local government finances. Instead, the Chancellor chose tax cuts that will ultimately be paid for by further drastic cuts to public services. The consequences are severe — for communities both in Greater Manchester and across the UK — and our most vulnerable residents will be hardest hit.

“It is unacceptable for local government to be treated this way. Councils have a statutory duty to provide certain services, but in many areas the funding they receive is below the level they need to deliver those essential services.

“Earlier this week the Chancellor criticised councils for spending too much on consultants, but the Budget offered more of the same begging-bowl culture that forces councils to bid for small pots of funding. Facilities people use every day are crumbling and councils are being forced to sell off assets, but the best the government can offer is a £5m pot, controlled by Whitehall, for renovating village halls.

“This government has made progress on English devolution but it cannot ignore the chronic underfunding of local authorities in our regions. Devolution needs to be built on solid foundations – not undermined by inadequate funding of local government.”

Strong focus on long-term affordable housing was noticeably absent says Orbit Group
Phil Andrew, Group Chief Executive at Orbit said: “Whilst we welcome the extension of the Household Support Fund for a further six months whilst the cost-of-living crisis continues, we were disappointed to see that a strong focus on long-term affordable housing was noticeably absent from the Chancellor’s Spring Budget, with measures not going far enough to help unlock the much-needed delivery of new affordable homes required to tackle the housing crisis.

“We have been calling on government for a laser focus on delivering new homes to achieve better economic outcomes, safer communities, and a healthier nation since the publication of our manifesto ‘Good Housing is the Key’, a call which has been echoed by many. Only last week the NHF and Shelter became the latest to bring to the forefront the huge economic and social benefits that building new affordable homes throughout the UK offers. With an election now looming, we urge all political parties to give housing the attention it deserves.”

Social housing decarbonisation and energy support
In response to National Insurance cuts, Nicholas Harris, Chief Executive of Stonewater commented: “The Chancellor’s confirmed cut to National Insurance rates will feature in the post-Spring Budget headlines, however for a large number of our customers across the country, this is another headline that will have little positive impact on their overall household income.

“The cost-of-living crisis and high inflation continues to be more deeply felt by the UK’s poorest households, so the Government needs to ensure that any changes they make are positively affecting customers of all income levels, particularly those currently hardest hit.

“At Stonewater, we’re committed to supporting all our customers who face financial hardship, whether through our charity foundation, Longleigh, or through financial advice from specialist organisations we partner with.”

On social housing decarbonisation, Nicholas said: “Stonewater continues to be committed to reducing carbon emissions and improving the energy efficiency of our homes. However, with over 30,000 of our homes being at least a decade old, we, and other providers in the sector, face an increasingly difficult challenge to playing our part in hitting the Government’s 2050 net zero carbon target.

“The Social Housing Decarbonisation Fund is supporting housing providers on this journey, but much more will be needed to decarbonise all our homes. Without an acceleration of the Fund, with a national retrofit plan that considers both nationwide and localised support, and the strengthening of the renewable technology workforce, many of our customers will be living in expensive to heat homes with high energy bills for years to come.

“We recently launched the Greenoak Centre of Excellence, which aims to identify the most effective routes for the housing sector to achieve net zero-carbon. We would urge government representatives, as well as other housing providers, to commit to engaging with the initiative so we can collectively discover and determine the best practice for decarbonisation for the sector, our customers and the planet.

“The need for us to make our stock more energy-efficient in order to benefit our customers continues to weigh heavily on us.”

With regard to energy support Nicholas commented: “Despite the recent Ofgem announcement of the reduction of the energy price cap coming into effect from April 2024, many of our customers will still not see the benefit. Customers who receive their energy supply through a communal system continue to be exposed to higher costs as their supplies are deemed as commercial use.

“We’d like to see a change to the system to help support our affected customers, especially those in retirement or supported living schemes that can least afford it, so they too can begin to see the benefit of a reduction in energy prices and be better protected from the cost-of-living challenges they face.”

UKGBC says Chancellor’s Spring Budget fails to address ‘urgent need for upgrading homes and buildings’
Simon McWhirter, Deputy Chief Executive at UKGBC said: “Unfortunately we’re yet again seeing vote-chasing sticking-plaster politics as opposed to the longer term political leadership we so desperately need. The Chancellor has failed to address the urgent need for upgrading our homes and buildings in this budget, which wouldn’t just help address the climate crisis, but also directly tackle rising energy bills, poor-quality homes and provide a jobs boost into the economy.”

Now is the time for productive debate on the possible solutions to the local government funding crisis says LGIU
Dr Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU), commented: “Local government was not entirely absent from today’s Budget. Headline announcements included a trailblazer devolution deal for the North East, devolution deals for Buckinghamshire, Warwickshire and Surrey, new Investment Zones and a series of funding deals to support housing. These will no doubt be welcome in those areas that receive them, but the Chancellor did not address the systemic funding issues in local government.

“Our latest research found half of councils believe they could face bankruptcy within the next parliament. Council taxpayers are paying ever higher rates for fewer services, and leisure centres, SEND provision and adult social care funding are all facing deep cuts.

“Now is the time for productive debate on the possible solutions to the local government funding crisis. Instead, the spending reductions required by this budget will increase all these pressures.

“The Chancellor recognised market failures in children’s residential care and SEND support but councils will not feel that this is enough to counteract the cost increases they have faced in those areas. Similarly many in local government will note that the Chancellor’s emphasis on public sector productivity is not reciprocated by removing some of the onerous funding hoops that councils have to jump through.

“We need a proper debate about how we fund local services and we need to reform council finances. This scattergun pattern of largesse granted or withheld will no longer suffice.”

Ashden asks, where was the bold leadership and credible plan for net zero and local authorities?
The Chancellor’s Spring Budget predictably majored on pre-election giveaways and political dividing lines, but will do nothing for those living in cold, damp, expensive to heat homes or for local authorities struggling to provide basic services, says climate solutions charity Ashden.

Will Walker, UK Policy Lead at Ashden said: “Apart from some welcome extensions to existing government schemes, such as a relatively small funding boost to the Green Industries Growth Accelerator, this was another barren budget for net zero.”

“The country is crying out for bold government leadership and a credible plan to address the triple-whammy of energy security, fuel poverty and the climate crisis. This has to be done through sustainable clean growth. Any plan needs to be backed with the right powers, resources and incentives to empower communities, leverage investment, upskill and expand the workforce, and revive the economy.

“The chancellor said he wanted to ‘build up our resilience to future shocks’. However, in reality he failed to ‘read the room’ and delivered a budget that misses the fact that citizens, by and large, care more about long-term investment in public services and getting help with their energy bills than short-term tax cuts.”

The Government should know that too, he says, as according to a YouGov poll, when asked what support they would like to see for the cost of living, 61% of voters choose energy bills as one of their top three priorities — the highest score for any policy option. This option is more than twice as popular as cuts to taxes on wages (29%) and is particularly popular among Conservative voters (70%).

Will also points to a new report from Lord Stern and other leading experts at the London School of Economics that says we only need increase annual public investment by about 1% of GDP, which will lever in another 2% of private investment, to get back on track with decarbonisation, boost growth and create jobs.

He also emphasises the need for coherent, stable and inclusive government policy on net zero. This would enable all parts of society to work together and crowd-in investment, alongside government, leading to cheaper energy, warmer homes, cleaner air, more resilient communities and a stronger economy.

“Unfortunately, what we’ve seen over the last decade from Government is dither, delay and division on net zero. This has undermined business and investor confidence, weakened supply chains and added nearly £2.5bn to UK energy bills.

“A case in point is the home heat workforce and heat pump industry. Several net zero retreats in recent years, including the latest U-turn this week with the scrapping of the Clean Heat Market Mechanisms — sometimes given the misnomer of ‘the boiler tax’ — have meant that the industry really don’t know where they are any more. They have had their fingers burned and don’t trust government schemes, undermining the progress of a growth sector — yet again this budget neglects to provide a properly funded retrofit plan to support action that could really make a difference to the economy and help households trying to keep their costs down and homes warm.”

Companies that are doing this sort of work against the odds, include 2022 Ashden Award winner for low carbon skills B4Box in Manchester which is an integrated construction training provider and retrofit specialist, working in areas badly affected by fuel poverty, to make homes more energy efficient and create green jobs.

And in the energy sector, Kensa Heat Pumps, winner of an Ashden Award in 2021 for green skills, show that it’s possible to deliver efficient and affordable heating through innovative ground source heat pumps and shared ground loop arrays, tackling a major source of carbon emissions and reducing fuel poverty. Where Kensa have replaced storage heaters for heat pumps in social housing, heating costs have typically halved, reducing fuel poverty for those who were not in a position to make any changes to their heating system themselves.

This Budget also falls on the day that Birmingham council approves the biggest budget cuts in local authority history, with many more insolvent or heading that way.

Will added: “Clearly the model is broken. Fundamentally, local leaders need more powers and resources devolved from Westminster, not further pressure on spending that has already been cut to the bone. Only by centering the needs of communities in the transition to net zero, reviving public services, and prioritising those most affected by it, will we get where we need to go and bring people with us.”

Social finance fund to support community-led housing and improving planning resources
Lara Borrett-Lynch, Head of Affordable Housing at Foot Anstey, commented: “The budget changes to SDLT [5.69 Stamp Duty Land Tax: Acquisitions by Registered Social Landlords and public bodies] — is unlikely to have a major impact on housing associations as similar exemptions and reliefs already apply. Of more interest is the budget announcement of £20m investment into a social finance fund to support community-led housing schemes and also taking steps towards improving the lack of resource in the planning system by matching industry-led funding of £3m for planning capacity and resources in the next spending review period.”

Technology investment welcomed
Cem Savas, CEO of real-time property operations pioneer Plentific, said: “It’s positive to see the Government’s proposals to invest £800m in technology in the Spring Budget, connecting communities and boosting public sector productivity. The power of AI is being harnessed to speed up processes, recognising patterns in MRI scans for the NHS, digitising the justice system, triaging calls to the Police and reducing application workloads for planning officers. The payback more than doubles the initial funding within five years, mirroring the huge returns on investment we are seeing working alongside social landlords and local authorities, utilising technology for good across the UK housing sector.”

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