Budget 2020 – key policy decisions

March 11, 2020

Local Government Lawyer sets out some of the key policy decisions in the 2020 Budget affecting local government, housing, health and education.

Responding to Covid-19

There will be a £12 billion plan to provide support for public services, individuals and businesses, whose finances are affected by COVID-19. This includes a £5 billion COVID-19 response fund “to ensure the NHS and other public services receive the funding they need to respond to the outbreak as the situation develops, and recover and return to normal afterwards.” The size of this fund will be reviewed as the situation develops.
Hardship Fund - The government will provide local authorities in England with £500 million of new grant funding to support economically vulnerable people and households in their local area. “The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through complementary reliefs.”
Statutory Sick Pay - The forthcoming COVID-19 Bill will temporarily allow SSP to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or have to self‑isolate, in accordance with government guidelines. For individuals it includes those caring for others who self-isolate, and support through the welfare system for those who cannot claim SSP, as well as a hardship fund.
SSP and small and medium-sized businesses - The government will support these businesses and employers to cope with the extra costs of paying COVID-19 related SSP by refunding eligible SSP costs.
Support for businesses that experience increased costs or disruptions to their cashflow - this includes expanded Business Rates reliefs, a Coronavirus Business Interruption Loan Scheme to support up to a further £1 billion lending to SMEs, a £2.2 billion grant scheme for small businesses, and a dedicated helpline for those who need a deferral period on their tax liabilities.
Business Rates reliefs – The government has already announced the Business Rates retail discount will be increased to 50% in 2020-21. To support small businesses affected by COVID-19 the government is increasing it further to 100% for 2020-21. The relief will also be expanded to the leisure and hospitality sectors. These temporary measures, taken together with existing Small Business Rates Relief, mean that around 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21. The Business Rates discount for pubs with a rateable value below £100,000 in England will be increased from £1,000 to £5,000. Local authorities will be fully compensated for these Business Rates measures.

Local government and communities

Local Infrastructure Rate lending – The government will provide an additional £1.15 billion discounted lending at 60 basis points above gilts via the Public Works Loan Board (PWLB) to support specific local authority infrastructure projects for England, Scotland and Wales.
Housing Revenue Account lending rate – The rate for discounted PWLB lending to support social housing will be reduced to 80 basis points above gilts for local authorities in England, Scotland and Wales.
Future of PWLB lending terms – The government will consult on revising the terms of PWLB lending “to ensure that local authorities can continue to invest in housing, infrastructure and frontline services”.
Public Works Loan Board powers – The government will reset its power to increase the PWLB lending limit.
Business rates - A fundamental review of business rates will consider further reforms to the business rates system and will report in the autumn.
Increased Business Rates retention in devolution deal areas and the Greater London Authority – In 2017-18, the government set up 100% Business Rates Retention pilots in devolution deal areas: Cornwall, Greater Manchester, Liverpool City Region, West of England and West Midlands. London has also benefitted from increased retention arrangements from 2017-18. These areas will continue to benefit from increased retention, and London will receive 67% retention in 2020-21, in line with the Greater London Authority funding agreement made in 2017-18.
Eliminating negative Revenue Support Grant (RSG) in 2020-21 – The government confirmed at the 2020-21 Local Government Finance Settlement that it will eliminate negative RSG through the use of foregone business rates, at a cost of £153 million. “This is to maintain the commitment not to adjust business rates tariffs and top-ups until the business rates retention system is reset.”

Planning, devolution, local growth

Planning reform - The Secretary of State for Housing, Communities and Local Government will shortly set out comprehensive reforms to bring the planning system into the 21st century, followed by a Planning White Paper in the spring. These reforms will aim to create a simpler planning system and improve the capacity, capability and performance of Local Planning Authorities (LPAs) to accelerate the development process. "Where LPAs fail to meet their local housing need, there will be firm consequences, including a stricter approach taken to the release of land for development and greater government intervention. The government will also explore long-term reforms to the planning system, rethinking planning from first principles, to ensure the system is providing more certainty to the public, LPAs and developers."
English Devolution White Paper – The government will publish an English Devolution White Paper in the summer, "setting out how it intends to meet its ambitions for full devolution across England".
Local Growth Fund – Decisions on the future of the Local Growth Fund will be made at the Comprehensive Spending Review (CSR). In advance of this, the Budget confirms up to £387 million in 2021-22 to provide certainty for local areas that they will be able to continue with existing priority Local Growth Fund projects that require funding beyond this year.
West Midlands local growth funding – The government is devolving over £160 million from the Local Growth Fund to West Midlands Combined Authority to accelerate progress on the Eastside Metro extension and phase one of the Sprint bus rapid transit network.
West Yorkshire devolution deal – The government has agreed a devolution deal with West Yorkshire to establish a Mayoral Combined Authority with a directly-elected Mayor from May 2021. This deal will provide £1.1 billion of investment for the area over 30 years, as well as devolving significant new powers to the area on transport, planning and skills. The deal also underpins the agreement of a long-term intra-city transport settlement for the region starting in 2022-23. Alongside this the government is providing up to £500,000 to support Bradford to develop plans that would maximise the benefits of potential Northern Powerhouse Rail connections.
UK Shared Prosperity Fund (UKSPF) – The UKSPF will "replace the "overly-bureaucratic EU structural funds, levelling up opportunity in each of the four nations of the country". Funding will be realigned to match domestic priorities, with a focus on investing in people. It will, at a minimum, match current levels of funding to each nation from EU structural funds. The government will set out further plans for the Fund including at the CSR.
Changing where the government makes decisions – The government will relocate a minimum of 22,000 civil service roles out of central London, the vast majority to the other regions and nations of the UK. This will take place over the next decade via the Cabinet Office and its Places for Growth programme. HM Treasury, alongside DIT, BEIS and MHCLG, will establish a new economic decision-making policy campus of over 750 roles in the north of England. HM Treasury will also establish representation in Northern Ireland and Wales, adding to its existing presence in Scotland.

Housing

Affordable Homes Programme – The Budget announces an additional £9.5 billion for the Affordable Homes Programme. In total, the programme will allocate £12.2 billion of grant funding from 2021-22 to build affordable homes across England. “This should bring in a further £38 billion in public and private investment. This new five-year programme will help more people into homeownership and help those most at risk of homelessness.”
Housing infrastructure allocations – The Budget confirms allocations from the Housing Infrastructure Fund totalling £1.1 billion for nine different areas.
Single Housing Infrastructure Fund – At the CSR, the government will launch a new long-term Single Housing Infrastructure Fund to unlock new homes in areas of high demand across the country by funding the provision of strategic infrastructure and assembling land for development.
Brownfield Housing Fund – To “level up” all regions of the country, the Budget launches a new £400 million brownfield fund “for pro-development councils and ambitious Mayoral Combined Authorities with the aim of creating more homes by bringing more brownfield land into development”. The government will shortly invite bids. The government will consider proposals from areas such as the West Midlands Combined Authority to expand their existing brownfield land fund.
Future Homes Standard – The government is “committed to reducing emissions from homes and to helping keep household energy costs low now and in the future”. In due course, the government will announce plans to improve the standards of new built homes.
Building Safety Fund – The Budget confirms an additional £1 billion to remove unsafe cladding from residential buildings above 18 meters to ensure people feel safe in their homes.
HM Land Registry (HMLR) – HMLR will be provided with £392 million to transition from a Trading Fund into part of central government.
Heat Networks – The Budget confirms £96 million for the final year of the Heat Networks Investment Project, which ends in March 2022. After this, the government will invest a further £270 million in a new Green Heat Networks Scheme, “enabling new and existing heat networks to be low carbon and connect to waste heat that would otherwise be released into the atmosphere”.
Enhancing Housing Benefit compliance – The Budget provides further investment of up to £12 million per year in local authority resource to maximise their capacity to tackle Housing Benefit fraud and error.
Rough sleeping – The Budget confirms the £237 million announced by the Prime Minister for accommodation for up to 6,000 rough sleepers and provides a further £144 million for associated support services and £262 million for substance misuse treatment services which, when fully deployed, is expected to help more than 11,000 people a year. “This will enable people to move off the streets and support them to maintain a tenancy for the long term.”

Health

Nurses – From September 2020, all new and existing students on nursing, midwifery and allied health courses in England will benefit from additional non-repayable maintenance grants to help with living costs. Students will receive at least £5,000 a year, with up to £3,000 further financial support available for eligible students with childcare responsibilities, as well as those studying in regions and specialisms where Trusts find it difficult to recruit nurses.
50 million GP surgery appointments – The government is committed to creating 50 million more GP surgery appointments a year in England. The government will achieve this by funding the Department for Health and Social Care and the NHS to train, recruit and retain up to 6,000 more doctors in general practice and 6,000 more primary care professionals, such as physiotherapists and pharmacists.
Health Infrastructure Plan (HIP) – As announced in September 2019, the government has committed £2.7 billion to deliver six major building and redevelopment schemes in hospitals in England, and a further £100 million of seed funding for other schemes to develop their plans. In total, this programme involves at least 40 hospital building projects.
Learning Disability and Autism Fund – The government will provide funding over the next three years to speed up the discharge of individuals with learning disabilities or autism into the community from mental health inpatient care in England.
NHS operational capital – The government will protect the level of NHS operational capital investment in England by increasing the DHSC’s capital budget by £683 million in the new financial year 2020-21. "This will allow Trusts to continue to invest in important capital projects such as estate refurbishments and building maintenance."

Community safety

Fire Safety – The government is providing £20 million for Fire and Rescue Services to increase inspection and enforcement capability and build a strategic response to the Grenfell Public Inquiry’s findings.
Domestic violence prevention – The government is providing £10 million in 2020-21 for innovative new approaches to preventing domestic abuse, working with Police and Crime Commissioners to expand projects like the “Drive” prevention programme.
Domestic abuse courts – The government will provide an additional £5 million to begin a trial of integrated domestic abuse courts in England and Wales. This funding will allow progress to be made on establishing these courts over the next year.
Royal Commission on the Criminal Justice process – The government will provide an additional £3 million to launch a Royal Commission on the Criminal Justice process in England and Wales. This funding will allow work on the Commission to begin at pace over the next year.

Public sector capability

Data sharing – The government has already improved its use of data through the Artificial Intelligence and Data Grand Challenge and the ONS Data Science Campus. The Budget goes further by investing £16.4 million over the next three years, including £6.8 million for the ONS to make it easier to share more, higher-quality data across government. "This will improve policy making and evaluation, and combine datasets in new ways to detect fraud. This investment is a first step in the government’s National Data Strategy to unlock the power of data across government and the wider economy, while building trust in its use."
Public Sector Value Framework – The government is developing the medium- to long-term priority outcomes that it is seeking to deliver for priorities such as levelling up, as well as the metrics that will be used to inform and improve performance against these outcomes. These will be published as part of the CSR and will include cross-cutting outcomes in areas where closer working between departments could help achieve better results.
Building commercial capability – Central government spends £50 billion per year on third-party goods and services. "The contracts governing these arrangements are often complex and require considerable expertise to manage effectively. The government will therefore provide £3 million of funding for face-to-face training and assessment of staff across government who manage the most important contracts. By further upskilling key staff, government can improve the efficiency and performance of its largest contracts."

Infrastructure

National Infrastructure Strategy - The government will publish a "landmark" National Infrastructure Strategy later in the spring which will set out plans for a once in a generation transformation of the UK’s economic infrastructure. This will respond to the recommendations of the National Infrastructure Commission’s (NIC) National Infrastructure Assessment.
Reviewing PFI contracts – The government has retired the PFI and PF2 models, but there are nearly 600 existing PFI contracts in England. The government will now focus on making sure they are well managed and represent value for money and will allocate £2 million in 2020-21 to carry out targeted contract reviews.

Education and skills

Further education capital funding – The government will provide £1.5 billion over five years (£1.8 billion inclusive of indicative Barnett consequentials), supported by funding from further education colleges themselves, to bring the facilities of colleges everywhere in England up to a good level, and to support improvements to colleges to raise the quality and efficiency of vocational education provision.
Institutes of Technology – The government will provide £120 million to bring further education and higher education providers in England together with employers to open up to eight new Institutes of Technology. These institutions will be used to deliver high-quality higher level technical education and to help close skills gaps in their local areas.
Facilities and equipment to support T levels – The government will provide £95 million for providers in England to invest in high quality facilities and industry-standard equipment to support the rollout of T levels. Funding will support T level routes being delivered from autumn 2021, including construction, digital, and health and science.
National Skills Fund – The government will consult widely in the spring on how to use the new National Skills Fund.
Apprenticeship Levy – The government will look at how to improve the working of the Apprenticeship Levy, to support large and small employers in meeting the long-term skills needs of the economy.
Apprenticeships – The government will ensure that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small- and medium-sized businesses.

Transport

Second Road Investment Strategy (RIS2) – "The government is boosting regional connectivity and transforming connections through the largest ever investment in England’s strategic roads." Through RIS2 the government will spend over £27 billion between 2020 and 2025.
Midlands Rail Hub – The government is investing £20 million to develop the Midlands Rail Hub, progressing plans for a major programme of improvements to rail services between the region’s cities.
Transforming Cities Fund – The Budget allocates over £1 billion from the Transforming Cities Fund.
Intra-city transport settlements – The government is investing £4.2 billion in the transport networks of eight city regions across England from 2022-23. Funding will be delivered through five-year, consolidated transport settlements agreed with central government and based on plans put forward by Mayors. As a first step, the government will open discussions with Greater Manchester, Liverpool City Region and West Midlands in the coming months. The new West Yorkshire Combined Authority, Sheffield City Region, Tyne and Wear, West of England and Tees Valley will also receive settlements, subject to putting in place appropriate governance to agree and deliver funding, including an elected Mayor for their city regions and transport networks.
Potholes fund – The government is announcing £500 million per year from 2020-21 to 2024-25 to help tackle potholes and to stop them from forming. As a result, the government will spend £1.5 billion in 2020-21 on filling in potholes and resurfacing roads.

Adult and Children’s Services

Adults with multiple complex needs – The government will commit £46 million from the Shared Outcomes Fund to provide improved support to individuals experiencing multiple complex needs, such as homelessness, reoffending and substance misuse.
Personal Independence Payment reassessments – The government will reduce the frequency of health assessments required for people receiving Personal Independence Payment (PIP). For those whose condition is unlikely to change, the Budget sets a minimum award review length of 18 months.
Research to support vulnerable children – The government will provide £2.5 million for research and developing best practice around the integration of services for families, including family hubs, and how best to support vulnerable children.

Environment

Flood defences – Starting in 2021, the government will invest £5.2 billion in a six-year capital investment programme for flood defences. This investment will better protect 336,000 properties from flooding.
Place-based resilience schemes – The government is confirming a new £200 million package of place-based resilience schemes to ensure faster recovery for rural, urban and coastal communities most at risk of flooding.
Winter flood defence fund – The government will provide £120 million to repair flood defences which were damaged in the floods in winter 2019-20.
Air quality – The government will provide an additional £304 million to reduce nitrogen dioxide emissions. This brings the total funding provided for local authorities to deliver their air quality plans to £880 million.
Tackling fly-tipping – The government will launch a £2 million fund to support innovative approaches to tackling fly-tipping.

Employment

Carers’ leave – The government will shortly consult on the design of Carers’ Leave: a new in-work entitlement for employees with unpaid caring responsibilities, such as for a family member or dependents. "This will support hardworking people to balance their caring responsibilities with work, particularly women who disproportionately undertake unpaid caring activities."
Neonatal leave and pay – The Budget announceda new entitlement to neonatal leave and pay for employees whose babies spend an extended period of time in neonatal care.

Source: Budget 2020 policy paper, HM Treasury.