Rachel Murray-Smith, Peter Collins and Bernadette Hillman consider the impacts of the new measures laid out by in the Autumn Budget 2024 for the local government sector.
Last week, the Chancellor of the Exchequer, Rachel Reeves, announced a series of measures that will affect local government.
These measures cover a number of areas from the structuring of future funding settlements to future local government devolution and reorganisation plans.
Funding, housing and planning
One of the most anticipated parts of this year’s Budget announcement related to local government funding settlements as this was going to indicate how the new Labour government would deal with the funding challenges that have faced the sector over the last decade or more.
The Chancellor announced £1.3 billion of extra grant funding for the next financial year. This will go some way to meet the significant pressures in certain areas (adult social care and temporary accommodation are two particularly in focus) but this increase will not be transformative.
If local authorities are not to be compensated for the increase in employer NIC contributions, there is a potential significant offset of this increase in additional costs elsewhere (particularly when combined with the increase in the National Living Wage).
So, it appears that, until further announcements are made (which are due in the coming months), there will be continuing uncertainty around local government financial arrangements and those councils on the cusp of service s.114 notices will remain nervous.
What will be welcome, however, is a move towards non-competitive multi-year funding settlements, which should at least provide some certainty and assist with long-term planning when it is implemented.
The increase in funding by £500m for the affordable housing programme is also likely to be received positively, as will the scaling back of Right to Buy incentives, but all eyes will be on how the AHP programme will be structured for the post-2021-2026 AHP world.
But the Government does appear to want to make inroads into the housing crisis, with the announcement that it is extending the discounted Public Works Loan Board Housing Revenue Account lending rate for another 18 months.
The stated intention is that this will support further capital expenditure on social housing within the HRA. Whether this materialises into new expenditure remains to be seen – it is likely that those schemes that are “shovel ready” will be the ones to benefit.
The budget does provide immediate funding for unlocking the delivery of housing on brownfield sites, and existing funding streams – such as the nutrient neutrality fund and the brownfield release fund. The real terms increase in local government funding, and changes to the right to buy programme will no doubt be welcomed by our local authority clients.
That said, the real reforms for the planning system will be delivered through other means such as the multi-year spending review, the response to the recent NPPF changes and the Planning & Infrastructure Bill. For planning the real change is keenly awaited.
Devolution and further local government reorganisation?
Councils and combined authorities will be very interested (and in some cases somewhat nervous) to understand more about the Government’s devolution plans.
The headline on devolution is the announcement for integrated settlements for Greater Manchester and the West Midlands Combined Authority from next year, with the North East, South Yorkshire, West Yorkshire and Liverpool City Region combined authorities becoming eligible the following year.
What may end up being a larger overall issue, however, is the announcement that the Government plans to simplify local government structures.
It remains to be seen that this will involve, but councils who have been through an LGR process in recent years will be quick to highlight the time, effort, expense and distraction that the process necessitates. The English Devolution White Paper, when published, is certainly going to receive a lot of attention.
Other Budget highlights include a 6 per cent increase in funding for SEND, a £250 million increase in funding for kinship care and £1.6 billion for the school rebuilding programme. There is also £2.1 billion allocated to improve the condition of the school estate, an increase of £300 million on the previous year.
Watch this space
This appears to be a budget that seeks to offer a certain degree of reassurance to the local government sector and trails some potentially interesting future policies. But what is possibly most important is what the Budget did not include.
We see the Budget this year as being the trailer of what is likely to be a series of headline announcements over the next few months that will provide detail on devolution plans and the government’s financial settlement for local government. So, it is very much a case of “watch this space”.
Peter Collins, Bernadette Hillman and Rachel Murray-Smith are Partners at Sharpe Pritchard LLP.
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