The 2024 Spring Budget was an opportunity for the government to address the acute budgetary challenges facing local authorities, but it fell well-short of remedying the “relentless squeeze” on borough finances.
The funding challenges facing London local government are immense. Boroughs’ resources remain 15% lower than 2010-11 in real terms, despite there being almost 800,000 more Londoners. London Councils also estimates the total budget gap for London local authorities in 2024-25 is £400 million. After successive years of efficiencies, including the reduction of staff numbers by 25% since 2010, boroughs are now using one-time reserves to maintain ongoing statutory services, which is completely unsustainable.
While the outlook for borough finances remains challenging, London Councils welcomes the extension of the Household Support Fund at existing levels. The fund was due to end this month and its continuation was a top priority for London Councils, due to ongoing cost-of-living pressures. However, the decision to extend the fund for only six months will reduce support for vulnerable Londoners just as winter approaches.
Boroughs are particularly concerned by the Budget’s lack of action on homelessness. Amid a worsening national homelessness crisis, London faces the most severe homelessness pressures in the country. One in 50 Londoners is currently homeless, with boroughs collectively spending £90m each month on temporary accommodation.
Key budget announcements relevant to London
- Household Support Fund – The Household Support Fund will continue at current levels for an additional six months to 30 September 2024, but the government did not indicate the future of this funding beyond that date.
- Housing: Development – The government is providing £240m for housing developments in Barking Riverside and Canary Wharf and £4m to set up the Euston Housing Delivery Group to support plans to develop up to 10,000 new homes.
- Housing: Right to Buy Receipts – The government is raising the cap on the percentage of the cost of a replacement home that can be funded by right-to-buy receipts from 40% to 50%. London Councils has long called for the government to remove restrictions on right-to-buy sales receipts. Increased flexibilities are essential for supporting local housebuilding ambitions and improving the supply of new affordable homes.
- Public Spending – Planned departmental resource spending for the years beyond the current Spending Review period (2025-26 to 2028-29) will continue to grow at 1% a year on average in real terms.
- Children’s Social Care – £45m of match funding will go to councils across England to build an additional 200 open children’s home placements and £120m to fund the maintenance of the existing secure children’s home estate.
- Business Support – The Alan Turing Institute, based in London, will receive up to £100m over the next five years. The National Theatre will receive £26.4 million to upgrade stages and infrastructure. There will also be a permanent higher rate of tax relief for theatres, orchestras, museums and galleries.
Our asks of London MPs
Some of the largest sources of finance pressures facing London local authorities received little or no mention in the Budget. In response, we encourage London MPs to raise the following five key issues with ministers:
Temporary accommodation: While we welcome the rise of Local Housing Allowance rates to the 30th percentile of local market rents from April, the government must now go further and enable local authorities to be fully reimbursed for the spiralling costs of those in temporary accommodation on housing benefit. The government should remove the January 2011 cap on Local Housing Allowance payable for temporary accommodation in Housing Benefit subsidy.
Asylum seekers and refugees: The Budget did not mention asylum seekers or refugees at all, and London continues to be disproportionately affected by the record number of homelessness presentations from recognised refugees leaving Home Office accommodation. Since April 2023, local authorities have received no additional funding to support asylum seekers in hotels. The government must fund boroughs to provide wraparound support to asylum seekers and refugees which includes facilitating access to employment, benefits and English lessons.
Housing: Whilst the Budget committed to new housing support in Barking Riverside and Canary Wharf, support is needed for existing housing to address the critical challenges of damp and mould and fire safety as a new regulatory system is introduced. The government must provide additional funding for councils’ Housing Revenue Accounts.
Adult social care: Increased demand and inflationary cost increases are putting unsustainable pressure on local authority budgets. The government should increase adult social care market sustainability funding to offset inflationary pressures and increase discharge funding to ensure patients receive reablement support to become physically fit, regain their independence and return home.
Net zero: To catalyse private investment into local net zero programmes and pilot neighbourhood level approaches to decarbonisation, we would value support from government to establish a partnership with councils through 3Ci, the Cities Commission on Climate Investment.
