The latest Independent R&B Monday Discussion Group opened with Malcolm Gardner welcoming regulars and new faces and acknowledging that, while few people were genuinely excited by the Budget, it was bound to dominate the conversation. Around the virtual table were, among others, Paul Howarth, Alex Clegg, Gareth Morgan, Naomi Armstrong, Bob Wagstaff, Michael Fisher, James Johnston, Claire Pearce-Crawford and Sean O’Sullivan, with Nikki Duckworth keeping things running smoothly behind the scenes.
Paul Howarth led off with an overview of the Chancellor’s Budget, which he characterised as “buying time” both economically and politically. Economically, he highlighted the extra fiscal headroom, around £22 billion by 2029–30, which improves the chances of meeting the self-imposed rule not to borrow for day-to-day spending. The markets appeared reassured; borrowing costs fell and the overall reaction was relatively calm. Yet Paul pointed to stubbornly high inflation, sluggish growth beyond the short term, unemployment around five per cent and flat living standards, even after the new measures to ease the cost of living. The clear hope, he argued, is that growth and key indicators improve enough over the next few years to avoid further obvious tax rises.
Politically, Paul saw the Budget as equally tactical. The Chancellor quietly dropped the trailed National Insurance rise, avoiding a direct manifesto breach, and has been signalling to MPs that tax increases will be focused on the richest ten per cent, with everyone else better off by the end of the decade. Spending has been front-loaded, with much of the tax pain pushed into later years, which is more palatable to MPs facing local elections in May. Among the tax measures, he drew particular attention to the £26 billion raised overall, including £8 billion from freezing personal tax thresholds, a “stealth” tax that will cost a typical worker around £220 a year. By contrast, the new council tax surcharge on properties over £2 million attracted plenty of headlines but is expected to raise only around £400 million, modest in the context of the whole package.
On the spending side, Paul highlighted the removal of the two child limit from April 2026, costed at about £3.2 billion, increases in the National Living Wage, extra spending for pensions and the decision to strip green levies from energy bills, which should be visible in household budgets. He also noted the commitment for central government to take on full responsibility for high-needs SEND funding, with more detail later in Malcolm’s slides, and a general pattern of “more money for lots of things”, including freezes in prescription charges.
Turning to local government, Paul picked out the new high-value council tax surcharge. He stressed the Treasury’s statement that councils would be “fully compensated” for the additional administrative costs and that the revenue will be reserved for local services. In his view, the phrase “fully compensated” will need very careful scrutiny, since someone will have to agree what “full” actually means in real systems and staffing terms. On business rates, he highlighted permanent lower rates for hospitality and retail, higher rates for properties over £500,000 and support packages around revaluation. For revenues and benefits teams this all translates into more change, more complexity and more work.
The discussion then moved into the Budget’s impact on the removal of the two child limit and the knock-on effects for Council Tax Reduction (CTR). Paul noted that because CTR schemes take Universal Credit income into account, higher UC awards could push some households into lower support bands in income-banded schemes, leaving families paradoxically worse off on CTR because they are better off on UC.
Michael Fisher picked this up, warning that councils with banded schemes that mirror the two child limit face an additional complication. Not only will they need to think about realigning their own child-related rules, they also face the practical problem that there is now very little time to consult on changes for April. In his view, even beneficial changes should be consulted on, which puts some authorities in a difficult position.
Alex Clegg echoed the concern about scheme design, pointing to the way default schemes treat UC income. A family might suddenly appear to have much higher UC because of the policy change, which could disrupt calculations further down the line and push them into a less generous CTR band.
James Johnston brought a concrete example from Barking and Dagenham. With a banded scheme and their own effective two child cap built into thresholds, he has identified around 1,200 to 1,300 cases with three or more children in a caseload of 10,500. After allowing for benefit cap cases, he still expects 850 to 900 households to be affected when the higher child elements flow through. Many of these families are currently in the maximum support band, so he anticipates them “slumping” into lower support. Appeals are likely, he felt, but the council would probably win because thresholds are lawfully set. The real pressure will fall on discretionary schemes, which are already overstretched. In his words, for CTR this feels like “give with one hand, take with the other”.
Malcolm asked whether this might translate into a wave of appeals. James thought some appeals were likely, though he was more worried about the extra administrative pressure and the strain on discretionary funds. Paul agreed that councils should be scoping the numbers now rather than waiting until April and suggested that it might still be possible to undertake a very short, focused consultation on beneficial changes, even at this late stage, provided councils are clear what they want to do.
Paul then briefly reviewed other welfare changes. He welcomed some of the more generous measures around temporary accommodation but warned that they add layers of complexity. He pointed to the Budget’s confirmation that the administration of housing benefit for pensioners and pension credit will be “brought together” from 2026. The wording is intentionally vague, he felt, and does not clearly say whether administration will be centralised or remain local. He also warned that freezing Local Housing Allowance rates from April 2026 will aggravate pressures in homelessness and temporary accommodation.
Naomi Armstrong picked up on the merged administration point. In her view, central government knows what it cannot do more than what it can; she advised colleagues not to expect anything dramatic on day one. The complexity of aligning systems and processes is considerable, particularly given the lessons from Universal Credit and the greater vulnerability of the pensioner cohort.
Bob Wagstaff wondered aloud whether the move might be linked to the next round of local government reorganisation. If new councils are going to be created around 2028–29, it would make little sense, he suggested, to give them pensioner housing benefit administration only to remove it again shortly afterwards. Combining pension credit and housing benefit centrally could, in theory, make restructuring easier and avoid building new HB teams in replacement authorities.
Gareth Morgan focused on the careful phrasing around “bringing together” administration. He read this as potentially meaning two systems managed through a single process rather than a full merger into a single benefit. Naomi agreed that this has been the message for some time; she noted that software suppliers are engaged, but there is no sign of the kind of radical rebuild that would be needed for a fully new joint system.
The group then touched on examples of data sharing between central and local government. Gareth mentioned the model in Wales, where a claim for pension credit can automatically trigger a CTR claim, and Naomi linked this to English practice where UC claims can be treated as automatic working-age CTR claims. Claire Pearce-Crawford, working in social housing in Wales, described emerging data sharing agreements between housing providers and local authorities. These, she said, are not yet delivering the real-time information people hoped for but do show how far some regions have moved in sharing data to identify under-claiming households and those affected by caps and childcare changes. Gareth felt the underlying ideas are sound, although he questioned whether some commercial approaches offer value compared with other, potentially cheaper, routes to the same outcome.
Paul closed his Budget section by returning to the spending plans and the efficiency assumptions. The Settlement already looked tight after the spring spending review; the Chancellor has now tightened it further, with spending allowed to grow only by 0.5 per cent, and is counting on significant efficiency gains, including through AI and technology. Paul regarded this as highly optimistic. In his view, those savings will not be delivered in full, which makes relying on them to fund a £22 billion buffer a very risky strategy.
Malcolm then invited Alex Clegg to introduce his newly published Resolution Foundation report on localised social security, produced as part of the wider “Safety Nets” project with researchers from seven universities and Child Poverty Action Group. Alex explained that the project responds to a reality in which the UK no longer has a single, unified social security system. Instead, there is a complex mix of national benefits and locally designed schemes, particularly in England, whose scale and effects are poorly understood.
Alex outlined the growth of locally delivered support since 2013, when responsibility for CTR and discretionary crisis support shifted from central government to local authorities. Spending on these local schemes has risen from around £33 million in the early 2000s to a peak of about £3.9 billion in 2024–25, with 96 per cent of this localised spending occurring in England. Malcolm asked whether, with so much money channelled through English councils, support is spread thinner in England compared to more coherent national approaches in Scotland, Wales and Northern Ireland. Alex broadly agreed, noting that the devolved governments have tended to favour nationally unified schemes, whereas in England the Coalition deliberately pushed responsibility down to councils, citing proximity to residents and local knowledge.
The report, Alex said, traces how discretionary crisis schemes became extremely uneven in the 2010s as non-ring-fenced funding was rolled into shrinking general grants. The introduction of the Household Support Fund has since re-established a more comprehensive safety net in England, albeit in a different form. CTR, however, dominates localised social security, accounting for around three quarters of spending. Alex’s analysis shows that 70 per cent of English councils now have schemes that are less generous than the old national Council Tax Benefit default. Conservative-controlled authorities are more likely to run less generous schemes, but another strong factor is financial resilience, with weaker and more deprived authorities tending to offer less support. As Alex put it, the result is that areas with higher deprivation often ask the poorest residents to contribute more towards council tax.
Michael Fisher asked whether there was any difference between districts and unitaries, given that district councils only bear a small proportion of the cost of CTR compared to unitaries. Alex admitted this was not something he had yet examined, but agreed it was a very important line of enquiry.
Malcolm pressed Alex on whether CTR belongs at local level at all, observing that the report hints that it might be better removed from local authority responsibility. Alex responded that, in theory, the UK has clear principles for means-tested national benefits, with entitlements based on need and smooth tapers as income rises. Requiring every council to design its own CTR scheme looks inefficient, even before funding cuts are considered. In practice, the post-2013 funding environment has meant localisation has mainly been a vehicle for cuts rather than innovation. The report therefore concludes that CTR in England should be recentralised in terms of design and funding, with options left open on whether the Department for Work and Pensions or the Department for Levelling Up, Housing and Communities would administer it.
Paul queried whether DWP, which has had nothing to do with CTR since 2013, would welcome it back, and pointed out that, legally, CTR is a reduction in liability rather than a benefit, which complicates where it “belongs”. Alex acknowledged that neither department seemed enthusiastic when he tested the ideas with them.
Sean O’Sullivan commented that many councils still think and act as though CTR is a benefit, not just a discount on liability. Malcolm reflected that splitting pensioners from working-age claimants in 2013 effectively preserved CTB in all but name for pensioners, and that the short lead-in meant most councils simply replicated old benefit rules rather than designing something new. Gareth reminded the group that Northern Ireland still operates a rate rebate system, including water rates, underlining how many different models now exist across the UK.
In closing, Malcolm suggested that Alex’s work opens up a bigger conversation about localisation, recovery and the future shape of local government finance, not just CTR. Sean had the final word, arguing that localisation is already being hollowed out at the top end, as the new premium on expensive properties will be collected by councils but pooled nationally, much like business rates.
Malcolm thanked Paul, Alex and the wider group for a rich discussion, confirmed that there would be no more Monday sessions until January, and wished everyone a Merry Christmas and a Happy New Year, promising a mid-December slide pack to tide people over until the group reconvenes.
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/).