The former chief executive of the London boroughs of Richmond and Hammersmith & Fulham, Richard Harbord, reacts to the Spring Budget and its impact on local government.
The Spring Budget is an extremely complicated statement. There are over 300 pages of detail on the government website but in essence it was extremely disappointing for local government. I say disappointing in terms that the expectation of anything else was very low.
There was no announcement of extra funding for local authorities that would address the current dismal situation. The Local Government Association (LGA) says that the core spending power in 2024/25 is 23.3% lower in real terms than 2010-11.
However, the rumours before the budget of cuts in public spending after the election were not specifically stated. There is reference to the fact that future spending reviews will be on an invest to save basis. Priority will be given to services where savings match the investment over four years. These will be based on the productivity plans which were announced with the settlement and repeated here.
It was notable that temporary accommodation was not mentioned, and nor was social care. Councils are now spending around £1.74bn on supporting 104,000 households in temporary accommodation. In 2023/24 this was a factor which on its own forced at least one council to consider issuing a section 114 notice.
The OBR believes that economic growth in 2024 will be 0.8% and 1.9% in 2025.
Public spending remains as stated in the Autumn Budget at a 1% real terms increase. The exception to that being a £2.5bn increase in the NHS which will roughly cover the recurrent costs of the agreed pay increases.
There is also the announcement of funds to digitise the NHS. I cannot remember how many failed attempts there have been over a long period of time to change IT in the NHS. The worry is that the increases in overall funds will go to the NHS and to justice and that will leave little real terms increase for local authorities.
The Institute for Government says the spending plans for the public sector are “impossible to deliver”.
However, in a desperate attempt not to be negative, I have sorted out the things that might be described as positive.
I was genuinely very pleased to see £165m for children’s social care. I think there is general agreement that the very increased reliance on the private sector for children’s placements has led to a very large increase in cost which cannot be avoided. The Spring Budget offers £45m matched funding to increase the number of local authority homes and £120m for maintenance of the current estate. These funds will be made available over the next four years.
As will an investment of £105m in 15 new special free schools. The chancellor says provision can be excellent when outsourced to the private sector, and this is an attempt to widen choice for parents and decrease costs for local authorities. The location of these schools which are intended to provide 2,000 places is to be announced in May 2024.
A new relief was announced for business rates for film studios. It is 40% relief lasting to 2034. However, where the studio is already getting transitional relief, the new relief will be capped. This commences on 1 April 2024.
There are changes to the reset period on empty property rates and there is to be new consultation on avoidance.
The Household Support Fund has been extended until September 2024. This is a very late announcement and many councils will have planned to close services at 31 March. There had been calls for a longer extension.
The cap on the percentage of the cost of a replacement home funded from Right to Buy receipts is raised from 40 to 50%. There was general agreement that the cap should be removed altogether.
There were announcements of specific investments in Barking, Canary Wharf, Leeds, Euston and Cambridge. Separate vision documents will be available around these.
£100m is to be made available for levelling up culture projects and £15m for the West Midlands Combined Authority.
There is a significant and worrying announcement around the LGPS where government are concerned that investment in UK equities has fallen to around 6%. The government will expect LGPS to make returns from April 2024 and will consider what action to take if the data demonstrates that UK equity allocations are not increasing. This seems like intervention, which is concern in terms of fiduciary duty. Additional returns will be needed as regards progress on pooling.
I am sure that more will become apparent but is currently buried in the 300 pages issued yesterday, but overall it is not good news for everyday business in authorities. There is little there to stop new section 114 notices being issued in 2024/25.
Richard Harbord is the former chief executive of Richmond and Hammersmith & Fulham councils.
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