Overview
The Chancellor announced a series of measures at the Spring Budget, including welcome changes to the childcare offer, as well as the Public Works Loans Board (PWLB) discount rate to support local authority borrowing for housing. However, overall, the support for London local government was very limited.
Heightened demand for local services as a result of the pandemic and the cost of-living crisis mean boroughs need to make savings of £100 million in 2023-24 to balance budgets. With the most acute service pressures in the housing, homelessness and health and care sectors, the measures announced in this Budget did not go far enough in protecting London’s most vulnerable residents.
Key announcements for London local government
Housing and homelessness
- The government announced it will bring forward a new discounted PWLB borrowing rate for council housebuilding from June 2023 at 40 basis points below the standard PWLB interest rate. This is a limited intervention to shore up existing housing supply plans. While this intervention is welcome, and a change London Councils called for in September 2022, it falls short of the package of housing reforms we sought, including removing restrictions on how councils can use Right to Buy receipts.
- Beyond this, there was almost no support for housing delivery, nor was there any mention of supporting local authorities with the mounting homelessness crisis facing the capital. Our latest estimate is that 166,000 Londoners – including 81,000 children – are currently homelessness and living in temporary accommodation arranged by their local borough.
Business rates retention
- The recommitment to expanding 100% retention of business rates to more areas in the next Parliament, alongside wider local government reform, is welcome, but with no specific details or a timeline for implementation, this means continued uncertainty for local government funding.
Childcare
- The Budget offered a series of new childcare measures, such as the provision of free childcare for all children over the age of nine months by September 2025. Childcare costs and affordability are the highest in London of any region. This is therefore a welcome development and will benefit working-age Londoners with young children.
- However, the phasing of the new measures and the issues with capacity and supply will be challenging. One issue is how the government will set rates for such a large portion of the childcare market and influence providers, and whether the methods for reviewing this rate will be responsive enough. It will be important that government designs the implementation of these policies in collaboration with local government.
Energy and net zero
- Aside from the £20 billion of funding that has been made available for domestic carbon capture, utilisation and storage projects and a commitment to expanding nuclear energy, the Budget announced little to support the delivery of net zero by 2050.
- A £63 million Swimming Pool Support Fund will help public swimming pools with cost pressures and energy efficiency, and this will be very welcome for London boroughs. It will be important for funding allocations to be set out swiftly and to accurately reflect local needs.
Levelling up and regeneration
- London has again fared poorly in the levelling up agenda, with none of the government’s newly selected 12 Investment Zones – nor the Levelling Up Partnerships – in the capital. The London Borough of Waltham Forest will receive £8.4 million for a high-quality regeneration project.
- The devolution trailblazer deals in the West Midlands and Greater Manchester combined authorities are a welcome step towards greater devolution in England. However, London’s devolution settlement is over 20 years old. The government’s commitment to deepen devolution should apply equally to London, to enable London boroughs and the Mayor of London to tackle the 21st century problems facing the capital. Devolving decision-making and spending powers closer to communities is the only way to deal with the huge challenges London is facing.
Pothole funding
- An additional £200 million will be distributed across England to finance pothole repairs, however we are disappointed that highway authorities in London will not receive any additional funding. There is a huge maintenance backlog on London’s roads, and it is unclear why London authorities have been left out of this new funding stream.
Our asks of London MPs
- London’s housing crisis continues to worsen, driven by an acute lack of affordable housing and rising living costs. While we are pleased to see the introduction of a new discounted PWLB rate to support the delivery of social housing, this is short of what is needed to combat London’s housing crisis. We are asking London MPs to support our call for an end to the unfair restrictions on how councils can use Right to Buy sales receipts. Giving local authorities complete flexibility over these receipts would help ensure every penny raised can be reinvested in building a replacement home. The government should also increase Local Housing Allowance rates to reflect rent levels more accurately in London’s housing market, as well as increase Discretionary Housing Payment allocations to help boroughs alleviate homelessness.
- Against a backdrop of a social care system at crisis point, it is disappointing that the Spring Budget failed to tackle the key issues faced in health and care, leaving the sector inadequately funded and unreformed. As a first step towards much-needed systemic change, we are asking London MPs to urge the government to reform the funding arrangements for Integrated Care Systems and increase renumeration rates for social care staff.
- Though the Chancellor mentioned the need to work towards our net-zero commitment, announcements in the Budget did not go far enough. To truly achieve our net-zero ambitions, more funding must be invested into the delivery of home retrofitting, including the full delivery of the £3.8bn Social Housing Decarbonisation Fund. We are asking MPs to raise this issue and the need for a long-term funding source to support decarbonising our buildings.
- London boroughs were again overlooked in plans to extend the scope of devolution across England. We ask that MPs continue to push for deepening devolution in the capital.
