‘No relief and no solutions’ to financial pressures in Hunt’s Budget say London councils

Chancellor Jeremy Hunt delivered his speech at the House of Commons. Pic: PA Media

Jeremy Hunt’s Budget brought “little short-term relief and no long-term solutions” to the finance of local government said the body representing councils in London.

In the Budget, Chancellor Hunt announced a national insurance cut by 2p in the pound for employees, a £5,000 UK ISA tax allowance for savers, and a government fund for people on benefits.

Hunt also unveiled many new funding plans and cuts across sectors. This includes taxation, transport, energy, and inflation, but there was little mention of how the budget plan will affect public services and local councils, as austerity continues.  

Claire Holland, Deputy Chair of London Councils said in a statement “The relentless squeeze on borough finances looks set to continue.” 

In a response statement to the new Budget Plan, the Mayor of Hackney, Caroline Woodley said the extension is “a worrying trend of short-term funding”.  

The Chancellor reversed the government’s plan to scrap the Household Support Fund (HSF) and extended it for another six months.  

Since its launch in 2021, HSF has provided £2.5 billion in welfare support through local authorities, helping millions of households facing hardship across the UK. The government distributed funds to local councils to aid vulnerable individuals struggling with living expenses.  

The program was set to end on March 31, but with the Spring Budget, it will continue into the summer months, and end just before winter approaches.  

Although councils across Eastlondonlines’ boroughs will continue to benefit from HSF, it is uncertain whether finances will improve since they have faced years of austerity and reduction in funding since 2010.  

Croydon Council declared bankruptcy in 2020 and is over £1.5 billion in debt, with Croydon Conservative saying it was “caused by irresponsible decisions of the Labour Administration.” 

Other councils across ELL, Tower Hamlets and Hackney, have increased council tax after planned cuts in services and the council’s struggle with high inflation.  

Woodley said: “If we are to plan and deliver the vital services our communities rely on, then we desperately need sustained investment. This budget not only fails to fix the much bigger funding crisis currently facing councils but will put even greater pressure on our finances in the times ahead.  

“In Hackney, despite these cuts, we agreed a balanced budget last week that will see continued investment in over 800 services. Today the Government has failed to respond to these same challenges on a national level, prioritising electioneering over the public services that make a real difference to people’s lives. 

A Local Government Association (LGA) survey found 85 per cent of councils said they would still have to make cost savings to balance their 2024/25 budget, despite extra government funding. 

Over half of the councils surveyed expected to cut costs in at least three different neighbourhood services. 

Chair of the LGA, Shaun Davies said: “Three-quarters of councils expect hardship to increase further in their area over the next 12 months,” and they are calling for the government to agree on a more sustainable successor to the HSF in the next six months. 

Lewisham Council was approached for comment but said that due to the mayoral election, they were unable to say anything. Tower Hamlets said they were also unable to comment. Croydon Council were also approached for comment but did not respond by time of publication. 

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