Budget 2017: reaction from the sector

The Chancellor of the Exchequer, Philip Hammond, delivered the 2017 Budget today. So how has the sector reacted? Local Government Lawyer reports.

See also: Budget 2017: key policy decisions

Lord Porter, Chairman of the Local Government Association

“The LGA has long called for councils to be given greater freedom to borrow to build new homes and today’s Budget has taken a step towards that by lifting the housing borrowing cap for some councils. This is an important recognition of our argument about the vital role that councils must play to boost homes for local families in need and solve our housing crisis, but does not go far enough.

“Our national housing shortage is one of the most pressing issues we face. The last time this country built more than 250,000 homes a year - in the 1970s - councils built more than 40% of them. Councils were trusted to get on and build homes that their communities need, and they delivered.

“If we are to get back to building 300,000 homes a year, then the Government needs to ensure all areas of the country can borrow to invest in resuming their role as major builders of affordable homes.

“It is hugely disappointing that the Budget offered nothing to ease the financial crisis facing local services. Funding gaps and rising demand for our adult social care and children’s services are threatening the vital services which care for our elderly and disabled, protect children and support families. This is also having a huge knock-on effect on other services our communities rely on. Almost 60p in every £1 that people pay in council tax could have to be spent caring for children and adults by 2020, leaving increasingly less to fund other services, like fixing potholes, cleaning streets and running leisure centres and libraries.

“Adult social care services are essential to keeping people out of hospital and living independent, dignified lives at home and in the community and alleviating the pressure on the NHS. Simply investing more money into the NHS while not addressing the funding crisis in adult social care is not going to help our joint efforts to prevent people having to go into hospital in the first place.

“The money local government has to run services is running out fast and councils face an overall £5.8 billion funding gap in just two years. The Government needs to use the upcoming Local Government Finance Settlement to set out its plan for how it will fund local services both now and in the future. We remain clear that local government as a whole must be able to keep every penny of business rates collected to plug funding gaps while a fairer system of distributing funding between councils is needed.

“Only with fairer funding and greater freedom from central government to take decisions over vital services in their area can local government generate economic growth, build homes, strengthen communities, and protect vulnerable people in all parts of the country.”

Jonathan Carr-West, Chief Executive of the LGiU think tank

“The Government has taken action to address the housing crisis at the source - with councils who have been dealing with this crisis on the ground. Announcements on the HRA borrowing cap will be welcomed alongside firm commitments on infrastructure.

"We welcome the commitment to business rates retention in London but councils still need to see progress on broader funding. Additional business rate retention pilots should be part of a coherent policy programme not just a free for all.

"The lack of a commitment on social care will not ease very current worries about funding - despite the announcement last week of the consultation on the Green Paper, it will not be published until next July.

"The Government has rightly focussed on the impact of the Grenfell fire and made additional support available to affected families but this will still need a commitment to ensure the lessons learnt are shared across local government.”

Scott Dorling, partner in Trowers & Hamlins’ housing and regeneration team

"With the Chancellor's promise of 300,000 new homes a year by mid-2020s, will the range of measures signalled in today's Budget be enough to achieve that ambitious target? The UK last built 300,000 new homes in 1977. In those days, local authorities were at the forefront of development, with almost half of new builds constructed by councils. Amongst the measures, the Government has promised to lift the Housing Revenue Account debt cap which would free up local authorities to build the housing needed. But the statement confirms that the debt caps will only be lifted in areas of high affordability pressures. How will those areas be defined? A £1 billion cap on this additional HRA borrowing capacity, by 2020/2021 has been provided and councils are going to be asked to bid for this additional borrowing capacity. Will this measure lead to a renaissance in council house building on the scale that is needed to assist in reaching the 300,000 new homes target?"

David Hutton, Head of Local Government at Bevan Brittan

“This is a Budget that clearly places an emphasis on authorities embracing the ‘place agenda’ – finding ways to stimulate economic activity and regional development in their own communities.

“The new wave of further devolution deals announced today – from the West Midlands to Tyneside, and from Manchester to the Oxford corridor – shows us that devolution is not dead. Contrary to some reports, it is still very much alive.

“Further, the Chancellor has unequivocally shown his support for the metro mayor/combined authority model – with half of the £1.7bn Transforming Cities fund earmarked specifically for the six areas with metro mayors.

“We will need to see the detail on how many of today’s announcements will actually work – such as the local industrial strategy, delivery solutions for the new garden towns, and more on the bidding process for discounted authority borrowing for infrastructure projects.

“However, what we see from today is the Government’s vision of councils as facilitators and convenors of place and economic strategy. Those that embrace the national agenda have a real possibility of being rewarded with funding.

“It’s game on for authorities around the country.”

Tiffany Cloynes, Partner at Geldards

“The Budget acknowledges that there has to be significant investment in housing in the UK, increasing state investment in the sector to its highest since the 1970s. The Government has sought to tackle rates, training and planning in addition to direct investment into the market. Bearing in mind that there has been a “failure” to deliver housing required since the late ‘60s there is always a question of if this is too little, too late?

“Calling for a review into planning, the Chancellor commented that if developments were being held back the Government would consider direct intervention through CPO or otherwise. This should be seen as a shot across the bows to developers who are land banking.

“Lifting the caps on the Housing Revenue Account will be well received by local authorities as many have sought more flexibility with the HRA. Likewise, it is good news that local authorities will also be able to charge 100% Council Tax premium on empty properties.

“Devolution isn’t dead with the announcement of a second devolution deal for the West Midlands and a £1.7billion transport fund for city regions with half being available to combined authorities with elected mayors and the other subject to bid. There is also a North of the Tyne devolution deal and £300 million will go towards ensuring HS2 infrastructure can accommodation future Northern Powerhouse and midlands rail services.”

Alison Michalska, President of the Association of Directors of Children's Services

“ADCS is extremely disappointed that the Chancellor did not use today’s Budget to reaffirm the Government’s commitment to children and young people by addressing the £2 billion funding gap in children’s services estimated by 2020. Local authority budgets have been reduced, on average, by 40% since 2010. We have worked tirelessly to protect our communities from the brunt of these cuts by reshaping our services or finding new ways of working but each budget round gets harder as local authorities look for more and more savings on top of those that have come before. We are forced to further reduce services in the very areas we know make an enormous difference to children and their families and can prevent them from reaching crisis point. This, alongside cuts to other public services, has impacted profoundly on our work and our communities. As a result, the number of children expected to be living in poverty by 2022 is a staggering 5.1m. This will only increase further unless we are given adequate, long-term funding to ensure the needs of children and families are met now and in the future.

“We welcome the changes to Universal Credit which will help families claiming benefits, to some extent, but these do not go far enough. Many families will still struggle to afford basic things like food and heating as they wait up to five weeks for their initial payment.

“The Chancellor announced some new initiatives in Maths and IT which do not even begin to address the extent of financial and wider pressures on our schools. Every child deserves a rich and fulfilling educational experience but, sadly, schools are forced to offer a reduced curriculum, cut extra-curricular activities and make staff redundant to balance the books. A country can only be fit for the future if it puts its children first now.”

Cllr John Fuller, Chairman of the District Councils’ Network

“The Budget rightly puts housing centre stage and whilst the Chancellor has articulated a key role for councils in building more homes in local areas, we believe some of the proposals announced today to access borrowing should go further and faster. We are determined to deliver more homes for our residents which are both appropriate and affordable. The whole country needs more homes and the raft of additional housing and infrastructure funding streams announced today must be available to all district councils who know their local areas best.

“District councils are the planning and housing authorities and will welcome the focus on making sure approved developments actually result in new homes being built. A rebalancing of the negotiating strength of local authorities is important and it is clear that developers have been put on notice that they will be expected to make good on the promises they make when they seek land to be allocated and permissions to be granted. The threat of deallocation should focus the minds of speculators on delivery, rather than financial engineering. This will help ensure families in all parts of the country can aspire to a roof over their heads at a price that they can afford.

“The Government has finally begun to realise that homes owned by councils are assets that can support borrowing to deliver more homes. However, the Government must go further, and lift the housing revenue account cap for all stock holding district councils immediately, rather than creating a bidding process for certain councils in future years. Additionally access to flexible borrowing for those authorities without housing stock is vital to ensure all districts can play their part, if we’re to truly deliver the homes we need. Flexibility around Right to Buy receipts is also essential. We also welcome the new housing deals covering districts in Oxfordshire, which should be extended to other ambitious district areas.

“We are disappointed that the clarity we had hoped for over CIL (the Community Infrastructure Levy) is yet to materialise. Some of the technical changes have been addressed but land value uplift has proved complicated in the past and is likely to delay urgent reforms that will finance the infrastructure to get stuck into the largest sites with the highest entry costs.

“The Budget rightly emphasised the importance of having incentives to encourage housing growth. In the provisional Local Government Finance Settlement we must see no further changes to the New Homes Bonus to ensure that it can continue to encourage the levels of housing growth required.

“The impact of the changes to business rates from RPI to CPI must not result in local government funding reducing. We await confirmation that local government will be no worse off next year as a result of this earlier switch and all future changes to business rates must be cost neutral for districts. We also need further certainty around the move to 100 per cent business rates retention.

“The changes to Universal Credit are important for district authorities and will reduce the demand on our services for those in need who require emergency help and are concerned about homelessness and arrears.”

Cllr Izzi Seccombe, Chairman of the Local Government Association’s Community Wellbeing Board

“It is a completely false economy to put money into the NHS while not addressing the funding crisis in adult social care. This sends a message that if you need social care, you should go to hospital.

“If government wants to reduce the pressures on the health service and keep people out of hospital in the first place, then it needs to tackle the chronic underfunding of care and support services in the community, which are at a tipping point.

“In addition, central government’s cuts to councils’ public health budgets, which fund vital prevention work that improves the health of children, young people and adults, reducing the need for treatment later down the line and also easing the pressure on the NHS, need to be reversed.

“Adult social care needs to be placed on an equal footing to the NHS. It is clear that the public understands this, as adult social care was a central talking point in the recent general election. It is therefore deeply disappointing that government has today chosen not to capitalise on this momentum.

“While the announcement of a green paper next summer shows government recognises the need for long-term reform, this does nothing to address the immediate pressures older and disabled people are facing. Those who desperately rely on care and support on a daily basis cannot be left to make do while waiting for yet another review. They want action now.

“The £2 billion over three years announced in the Spring Budget was a step in the right direction, and councils have been effectively using this money, for example to reduce delayed transfers of care. However this was one-off funding and is not a long-term solution.

“Adult social care still faces an annual funding gap of £2.3 billion by the end of the decade. As a minimum government needs to plug this gap urgently to ensure services can keep on running and stop providers going bust, while we have the bigger conversation around how we secure a long-term sustainable future for social care.”

Paul Dossett, head of local government, Grant Thornton UK

“In a time of austerity as the public sector is continually expected to produce more with less, this Budget left something to be desired in terms of support for our public services. With local government finances at a tipping point and more than one in three councils spending over their anticipated budgets in the 2015/16 financial year, and a similar result expected this year, this Budget needed to be one that provided assurance for the sector but it missed the mark in terms of overall funding.

“We need to take a place-based approach to help solve the problems areas are facing and to increase productivity and experimentation and innovation in the delivery of public services. Devolution deals are a clear answer to this and it was encouraging to see new deals announced today. But with the majority of these focusing on big city regions we need to ensure the smaller towns and counties are not left behind. An economy of the future needs all areas to be performing at their very best and we need to see equal opportunities for all areas across the UK.

“Continued investment into the NHS is necessary but the announcement today didn’t even cover the current deficit forecast until 2020. Social care continues to be the main driver on demand in council spending and yet received no mention; a very obvious omission. In 2011/12, social care accounted for around 28.9% of total service expenditure and rose to 30.16% in 2015/16, indicative of the growing demand that is not being met. In particular, children’s services have faced challenging savings targets and very difficult decisions over a number of years and in 2015/16 73% of all councils overspent against their children's social care services budget as they struggled to produce more with less. By avoiding addressing this issue directly and continuing to invest elsewhere in the health and social care system the Chancellor is missing a valuable opportunity by choosing to invest in only the roof while the house around it is crumbling.

“The lifting of the HRA borrowing cap will be welcome news to local authorities. It allows them the freedom to invest where needed in their local areas, but it comes with requirements. With the country in an extreme housing crisis we desperately need further clarity on what the government means by ‘high demand areas’ and how this will be defined moving forward. In our view the cap should be lifted for all housing authorities so they can plan holistically across the country to build the social housing that we need.

“The new housing deal for Oxfordshire shows an obvious focus from government on high growth areas, although if we want to prevent others falling even further behind we need to ensure all areas are given the same opportunities. Today’s Budget announced a number of supportive measures to help boost the dwindling housing market but it is not clear what impact they will actually have and only time will allow us to assess how helpful they will be.

“The announcement today provided bits of investment here and there for transport across the country however it is nowhere near the level of investment we need and is again focused only on specific areas. Increased connectivity is essential to help boost local economies and support jobs across the whole of England, not just in our main city areas.

“With very little funding and the main areas of demand for local authorities not even getting a look in, this is a Budget that has once again not done enough for our public sector given the cost of supporting an ageing demographic, increased demand on children’s services and the spike in homelessness.”