On 4 November 2024, the Independent R&B Discussion Group met to examine the latest budget and its implications for local services, public spending, and policies affecting welfare and business rates. Led by Malcolm Gardner, the session provided detailed insights from experts in local government finance and welfare, with a focus on emerging policies and the economic outlook.
Budget Overview and Economic Context
Paul Howarth opened with a comprehensive overview of the budget, highlighting major allocations, such as £41 billion raised through increased taxes, £44 billion in additional public service spending over five years, and a record £100 billion in capital investments. He emphasised that this budget aims to foster growth, though modest GDP forecasts of 1.1% in 2024 and 2% in 2025 suggest challenges in achieving substantial economic expansion. The inflation rate, projected to be 2.5% in 2024 and stabilising around 2% by 2027, was viewed positively, though some panel members raised concerns about sustainability.
Paul noted significant increases in funding for health and education (£10 billion and £5 billion, respectively) and an expansion of the Household Support Fund (HSF). Naomi Armstrong added that £421 million of the £1 billion HSF budget extends the scheme by six months (October to March), with the remaining amount largely allocated for Discretionary Housing Payments (DHP). However, members expressed uncertainty about how this additional £580 million would be divided and administered, given that the annual DHP budget previously stood at approximately £100 million.
Discretionary Housing Payments: A Vital Support Mechanism
The increased funding for DHP was a key topic, as members considered how this expanded budget could impact vulnerable households. DHPs are intended to assist those struggling to meet housing costs, offering essential support, especially as housing and rental prices continue to rise. Gareth Morgan noted that the increased DHP allocation is crucial for helping residents whose housing benefit or Universal Credit payments don’t cover their full rent, thus supporting them to avoid arrears and potential eviction.
Naomi and others voiced concerns about the stability of DHP funding, as it has traditionally been allocated on an annual basis, making long-term planning difficult for councils. Members highlighted the importance of a sustained commitment to DHP funding, especially as many low-income households face ongoing financial challenges. Naomi emphasised that without consistency in DHP allocations, councils struggle to plan support effectively or provide continuous assistance to those in precarious housing situations.
Implications of the National Living Wage Increase
Gareth presented a detailed analysis on the national living wage increase. He argued that while the government promotes this as a win for workers, the primary financial benefits go to the government. Gareth explained that, with various tax deductions and benefit tapers, low-income earners see only a small portion of the increase – especially those on benefits, who receive around 6%, while the government recoups roughly 94% through taxes and benefit reductions. Phil Agulnik agreed, underscoring that benefit reductions offset wage increases, limiting the impact on disposable income.
Welfare Policy Changes and Fraud Prevention
The group also examined the government’s anti-fraud initiatives, particularly the planned increase in funding for fraud and error reduction in welfare and the NHS. Naomi emphasised the importance of ensuring a high return on investment, noting that efficient spending could significantly improve service delivery and reduce wasteful expenditures. Howarth mentioned a working group addressing the integration of Pension Credit and Housing Benefit, though no concrete outcomes have been reached.
Richard Hanby highlighted a rise in right-to-buy applications, citing Doncaster City Council’s report of over 1,000 new applications since the budget was announced. It noted that Ascendant Solutions, offers a solution to risk-assess right-to-buy applications, helping to reduce fraud and error, which could be essential if applications continue to increase. (You can contact Ascendant at support@ascendantsol.co.uk.)
Business Rates and Local Government Finance
Bob Wagstaff discussed the changing business rates landscape, especially the retail, hospitality, and leisure (RHL) relief, which is set to end in April 2026. New multipliers will replace the relief, potentially leaving some businesses vulnerable. Wagstaff suggested that the system doesn’t yet fully reflect shifts in consumer behaviour, such as the move away from in-store shopping, which has left many high streets struggling with empty retail spaces.
From a London perspective, Tom Clark voiced concerns about avoidance strategies being employed by some businesses. He also highlighted the financial strain high business rates put on firms, questioning whether continuing relief was beneficial or if it merely delayed inevitable closures. Malcolm Gardner echoed this sentiment, suggesting that ongoing support for unsustainable businesses might impede necessary economic adjustments.
Devolution and Local Authority Restructuring
The discussion concluded with an exploration of potential devolution and restructuring for councils, particularly in two-tier areas. Howarth and Gardner speculated that upcoming white papers on child poverty and devolution might shape the future of local governance. Naomi and other members discussed the challenges small councils face in delivering services efficiently, given limited resources and increasingly complex local needs.
Conclusion
The Independent R&B Discussion Group’s deliberations provided a nuanced perspective on the budget’s potential impacts. From welfare reform to the challenges facing high streets, participants stressed the need for careful policy execution and transparent government communication. With further fiscal statements anticipated, local authorities and welfare services may see additional adjustments to align with the evolving economic framework. The budget, described by Paul as more of a “roadmap,” signals numerous changes ahead for both public services and local government operations.
Access the recording at https://bit.ly/4hB9duM
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Please note that the handout contains additional slides covering other items of interest in the news and job adverts, which are provided in partnership with Business Smart Solutions (https://www.businesssmartsolutions.co.uk/).