Budget debate: Rebuilding Britain, House of Commons, 6 November 2024

Devolution

We are pleased that the Government wants councils to be at the heart of its Kickstarting Growth mission, and that devolution is to be deepened and widened across the whole country. For all councils to play a full and meaningful role, they need long-term certainty of funding and the flexibility to make investment decisions that reflect local economic priorities. This includes skills and employment, transport and digital connectivity.

The LGA welcomes the Government’s intention to act on our longstanding call to work with local leaders, including the LGA, on the upcoming English Devolution White paper and Bill. This will set out the government’s plans to widen evolution to more areas and deepen the powers of existing mayors and their combined authorities, ensuring they have the tools needed to boost economic growth. It is vital that local leaders at all levels are brought along in this process, not just mayoral combined authorities.

The LGA supports the transfer of powers from Whitehall to local communities, and we have consistently called for greater powers, funding and responsibilities to flow to local government as the democratically elected leaders of place. We welcome formalisation of devolution through statute. However, we are of the view that local government reorganisation is a matter for local areas to decide. We would welcome further co-production of the White Paper via the Leaders Council and broader engagement with the sector.

We are pleased that Government has committed to delivering a simplified local funding landscape, as part of the English Devolution Bill. Only a consolidated and long-term approach to inclusive growth and infrastructure funding, giving local leaders flexibility over where and how investment decisions are made locally, will allow local leaders to work alongside Government to deliver on the growth mission, deliver for the needs of local people and ensure that tax-payers money goes to supporting people where it’s needed the most.

It is positive that grands will be consolidated into the Local Government Finance Settlement, as well as moving towards a multi-year settlement for local government so local authorities can plan more effectively.

The LGA has called for a radical re-investment in local devolution, drawing on the lessons from place-based budgeting pilots, including Total Place and Whole Place Community Budgets, to reform public services and align scarce resources with the needs and aspirations of local communities.

National Insurance

The Government is increasing the rate of employer National Insurance contributions (NICs) from 13.8 per cent to 15 per cent and reducing the per-employee threshold at which employers become liable to pay National Insurance (the Secondary Threshold) from 6 April 2025 to £5,000. The Government needs to give clarity on whether councils will be protected from extra cost pressures from the increases to employer National Insurance contributions for directly employed and contracted out services.

Industrial Strategy and local growth

The LGA has long called for and welcomes the Chancellors announcement of the transitional arrangement of the UK Shared Prosperity Fund and other growth funding. This will provide stability for local authorities to continue to invest in their local economies and communities. We would welcome the opportunity to work with the Ministry for Housing, Communities and Local Government (MHCLG) to maximise the flexibilities and opportunities of this transitional arrangement.

It is positive to see progress and further investment on the refocused Investment Zone programme, underpinned by partnership between national government and local leaders.

The LGA welcomes the Government’s intention to reform the growth funding landscape to rationalise the number of funds, move away from competitive bidding, and better support local leaders to drive inclusive growth. We have called for a simplified, consolidated approach to growth funding, allowing local leaders flexibility over where and how investment decisions are made locally. We hope the Government will adopt the principles set out in our report, Future of Growth Funding, when outlining their ambitions for growth funding in Phase 2 of the Spending Review.

The LGA has expressed the need for a clearly articulated national economic strategy which sets objectives and sets out how local inclusive economic growth contributes to this, how local economic inequalities will be addressed, and a clear role for local devolution policy. The LGA has consistently called for a subnational approach to tackling productivity and inclusive growth.

Local government has a core role in driving and supporting inclusive economic growth and several of the sectors identified by the Government’s Industrial Strategy, including creative industries and the green sector. We have called on government to recognise the valuable role of local authorities as convenors of place, and we would welcome further engagement to shape the Industrial Strategy to reflect this.

Skills and jobs

Get Britain Working

The Chancellor announced that, as part of the Get Britain Working White Paper, the government is investing £240 million to trial new ways of getting people back into work. The government plans to tackle the root causes of ill-health related inactivity, support young people who are ‘not in education, employment or training’ (NEET), and help people to develop their careers.

The LGA looks forward to engaging with the Get Britain Working White Paper which will build on the Back to Work Plan announcements and reforms made by the Department for Work and Pensions in July. These can be put to best effect through a place-based approach which we have set out through our most recent Work Local proposals. There are many similarities between the Government’s proposals and the LGA’s Work Local plan.

Skills England

The government has already established Skills England (in shadow form) whilst the Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill passes through Parliament.

We believe that getting the skills offer right in places is critical to helping people enter and progress in work and ensuring employers in the public, private and charitable sectors have the workforce they need. Councils know what is needed to build skills pathways and are keen to see this knowledge feed into Skills England.

Apprenticeship Levy

The government announced steps to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy with an investment of £40 million, which will help to deliver 23 new foundation and shorter apprenticeships in key sectors. The reformed levy will be developed in partnership with employers, providers, and learners. Skills England will take the time to consult with a wide range of partners to ensure that levy-funded training meets the needs of employers, providers, and learners, and secures good value for money.

We need to see reforms which enable a place-based approach that maximises flexibility to pool funds locally to address supply / demand issues, target sectors, widen participation and for non-Levy funding, unspent Levy and traineeships to be commissioned locally. Alongside this, as one of the largest local employers in places, local government has significant workforce challenges and we need flexibility to use the Levy to meet these needs, including to ensure we have planners of the future. We look forward to being engaged by government on this.

Local transport

The additional funding for active travel, electric vehicle charge points, and for connectivity in our towns, villages and rural areas as well as in our major cities, will help improve access to jobs, services, and the high street, support inclusive growth, and keep communities connected. Investment in road repairs has been greatly impacted by inflation; today’s step increase in funding for highways maintenance will enable councils to continue with planned schemes.

We welcome the additional £500 million for local road maintenance in 2025-26, however there £16.3 billion backlog of road repairs has developed and will continue to grow without more funding over a longer term and greater powers and flexibility for councils to maintain and improve their assets.

The Government need to consolidate and provide long-term certainty for infrastructure funding streams at the forthcoming spending review. This will enable councils to plan more effectively for the long-term and develop a pipeline of schemes that help give investors more confidence in the future prosperity of local economies.

We are pleased the Government has listened to the LGA and councils and extended the bus fare cap to 2025, although the fare increase will impact passengers. More work is needed to attract them back onto buses to ensure services are sustainable for our communities.

People need well-funded buses, yet councils face a confusing and inconsistent funding system. Streamlining bus funding into a single, long-term pot would give councils greater control over services and spending and residents more long-term certainty over future services. This change would improve access to jobs, services, and the high street, support inclusive growth, keep communities connected, and reduce air pollution.

Delivering the social homes we need

An acute shortage of social and affordable homes, and rising rents in the private rented sector continue to acutely impact the lowest income and vulnerable families, driving hardship and homelessness.

In our Budget submission, we made the case for councils to be empowered to build more affordable, good-quality social homes quickly and at scale. This will be vital to ensure everyone has access a safe and genuinely affordable home, while improving public finances through reduced housing benefit and temporary accommodation expenditure. The Budget contained several measures that will help to boost councils’ ability to build desperately-needed affordable housing for local communities, including:

• A £500 million boost to the Affordable Homes Programme to build up to 5,000 additional social and affordable homes.
• Consulting on a new long-term social housing rent settlement of CPI+1 per cent for five years to offer certainty for social housing providers and give the sector the confidence to build more social homes
• Extending the discounted Public Works Loan Board Housing Revenue Account lending rate until March 2026.
• Reducing discounts on the Right to Buy (RTB) scheme and enabling councils in England to keep all the receipts generated by sales.

We’re pleased that the Government has listened to our calls to increase Affordable Homes funding and continue discounted Public Loan Works borrowing rates. This will provide much-needed additional support for council housebuilding projects. In the long term, we want Government to work with us to roll out five-year local housing deals to all areas of the country that want them – combining funding from multiple national housing programmes into a single pot. This will provide certainty and efficiencies and could support delivery of an additional 200,000 social homes in a 30-year period.

We’ve long called for RTB reform, as it has become increasingly impossible for councils to replace social homes sold through the scheme. These measures will help to support the replacement of sold homes and to stem the continued loss of existing stock. The Government has extended the cost floor period from 15-30 years, meaning that the purchase price cannot be lower than the total spend on construction, repairs or maintenance of the property over a 30-year period. Although the LGA previously called for the cost floor to be indefinite, we’re pleased the Government has partially acted on our recommendation to reduce discounts.

A five-year rent settlement is a step in the right direction in providing certainty for councils on rental income, but to really strengthen and provide stability to Housing Revenue Accounts, a minimum 10-year rent settlement is needed, alongside restoration of lost revenue due to the rent cap and a review of the self-financing settlement of 2012. This would better support long-term business planning to ensure councils can deliver high quality homes and associated support for their tenants.

Business rates

The LGA welcomes the business rates measures as they will provide support to a range of businesses. However, freezing the small business multiplier also removes buoyancy from the business rates system and without alternative means of funding council income would reduce.

It is positive that the Government has provided assurance that local authorities will be fully compensated for these business rates measures and that this will include the funding of new burdens for any administrative expenses and IT costs. Account also needs to be taken of the consequences for business rates retention and sufficient time needs to be given for implementation.

The LGA will engage with the consultation on transforming business rates. We would suggest that the Government:

• Introduce further clampdowns on business rates avoidance along the lines of those introduced in Wales and Scotland.
• Give councils more flexibility on business rates reliefs such as charitable and empty property relief.
• Give councils the ability to set their own business rates multiplier, or at the very least be able to set a multiplier above and below the nationally set multiplier.

Digital infrastructure

Digital access is essential to enabling people to fully participate in an increasingly digital society and engage in a 21^st century education and employment. The LGA welcomes further investment in the rollout of digital infrastructure to underserved parts of the UK. It is vital that mobile network operators and the Government work with councils to deliver their ambitious programme. Councils are best placed to understand the digital needs of their areas and ensure that local policy, such as planning and highways regulation, is streamlined to help improve connectivity.

Councils continue to play a leading role in digital connectivity, and this has built up a pool of internal expertise that has helped facilitate both roll-out and take-up. However, with the centralised management of Project Gigabit within Building Digital UK (BDUK), there is a risk this local expertise could be lost. Given the right funding and opportunity to work in partnership with government, councils could play an enhanced role targeting left behind communities, driving demand stimulation and providing digital upskilling.

The Government should fully fund a digital connectivity champion in every local authority. Local authority digital champions act as a point of contact, helping extend gigabit-capable broadband. It’s crucial that these champions are integrated into other digital programming in councils, particularly digital inclusion, to ensure that this resource can be most appropriately used by councils for the benefit of their communities.

Elliot Gregory
Public Affairs and Campaigns Advisor

Phone: 020 7664 3059 

Mobile: 07766252833

Email: [email protected]