Spring Statement could mean reduction to MHCLG budget: County Councils Network

The County Councils Network (CCN) has expressed concern after reporting that the Chancellor of the Exchequer’s Spring Statement indicates the Ministry of Housing, Communities and Local Government (MHCLG) could see reduced funding over the course of this Parliament.

The CCN added that this could mean county councils face a "double whammy" as the Government's fair funding review, due to be completed this year, is expected to direct funding to urban and city areas at the expense of counties.

The Chancellor, Rachel Reeves, delivered the Spring Statement in Parliament today (26 March).

The accompanying document notes that before accounting for policy changes, the fiscal outlook had weakened since the Budget last autumn and "without government action", the current Budget would be in a deficit of £4.1 billion by 2029-30.

"This represents a £14.0 billion deterioration in 2029-30, mainly driven by higher debt interest costs", the document added.

Responding to the budget, Cllr Tim Olver, Chairman of the CCN, said: "Today's Spring Statement indicates that departments such as the Ministry of Housing, Communities and Local Government face a reduction in anticipated funding over the course of this Parliament, compared to what the Government set out in the Autumn Budget.

"This could have a substantial impact on the vital local services that people rely on."

He continued: "Councils have had to make very difficult decisions in setting their budgets this year, and would likely face for another four years of tough choices."

"For councils in county areas, they would face a double whammy as the government's fair funding review, due to be completed this year, is likely to direct funding to urban and city areas at the expense of counties.

"This is despite county areas facing extreme demand-led pressures in adult social care, children's services and home to school transport, alongside the additional costs of delivering services in rural places."

He warned that if funds are taken away from county areas, it could push many well-run county councils and unitary councils to the "brink".

Cllr Oliver urged the Government to make sure the upcoming Spending Review invests in local services.

Cllr Claire Holland, Chair of London Councils, echoed the call for more funding in the upcoming spending review.

She said councils play a critical role in achieving the Government's priority of economic growth, but noted that the "crisis in town hall finances are holding us back".

She added:  "It's vital the upcoming Spending Review and planned reform of council funding deliver the investment and financial sustainability boroughs need to drive growth in the capital and across the country.

"Without this, we risk more and more boroughs entering effective bankruptcy – a situation which would undermine economic confidence, hold back growth, and cost the public purse more in the long run."

Cllr Holland said the Government must continue focusing on investing in prevention and reform of public services to deliver better value for money.

"Boroughs are committed to this agenda, but we need funding which enables us to make these long-term changes, as well as dealing with the current pressures which have built up over the last 15 years", she added.

Today's Spring Statement confirmed a £2bn investment in social and affordable homes in 2026-27, which was announced earlier in the week.

The document described the investment as a down payment to provide certainty ahead of further investment in social and affordable housing to be announced at the Spending Review, covering additional support in 2026-27 and for future years.

"This funding will deliver up to 18,000 homes, and will immediately allow housing associations and local councils to bring bids forward for new developments in every part of England, including sites in Thanet, Sunderland and Swindon," the budget added.

The Spring Statement also contained information from the Office for Budget Responsibility (OBR), which reported that the Government's recent reforms to the National Planning and Policy Framework (NPPF) would lead to 170,000 additional homes built over the forecast period.

The budget said: "This increases the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy, and by over 0.4% in 2034-35.

"The government's planning reform measures have led to the biggest positive real GDP effect that the OBR has reflected in its forecast for a policy with no fiscal cost.

"This helps to secure the public finances: the economic effect of government policies, driven by planning reforms, reduce borrowing by £3.4 billion in 2029-30."

Adam Carey