This week’s budget took place against the backdrop of a growing Coronavirus threat. Much of the budget was focused on dealing with this immediate challenge and included £12 billion worth of announcements focused on supporting the NHS, businesses and people most at-risk.

£12 billion

worth of announcements

It is important to recognise that the whole of government is focusing its efforts on mobilising a response.

Alongside this, the budget started to flesh out exactly what the government’s ‘levelling up’ agenda might look like in practice.

On the day of the budget (Wednesday 11 March), Tony Armstrong made this short statement. In this post, we look at the key announcements (and omissions) in more detail and lay out what they might mean for Locality members. We’ll cover:

  • Coronavirus response funding
  • Poor economic outlook and investment in infrastructure
  • Devolution back on the agenda
  • Notable omissions – Community Ownership, Community Housing and the UK Shared Prosperity Fund
  • A new spending review and other opportunities

For background and context to the Budget, please read our joint proposal with sector colleagues sent to the Treasury in February.

Coronavirus response funding

The government announced a raft of measures aimed at dealing with the threat of Coronavirus. The chancellor announced funding focused on supporting the NHS, businesses and people most at-risk.

However, as we said in our statement, it is vital that these funds – from statutory sick pay support to loans and grant funding – benefit charities as well as businesses. Charities are important employers who will be under additional pressure working with affected communities.

We – along with other sector colleagues – spoke to Ministers and the Deputy Chief Medical Officer on Friday 13 March to raise concerns and will continue dialogue with them in the coming days and weeks.

Business interruption loans

Since the budget, it has been confirmed that charities will have access to Coronavirus Business Interruption Loansbut only if more than half their income is from trading. We will be continuing dialogue with the government to lobby for similar support to be extended to mall charities.

Statutory sick pay (SSP)

The government will support small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related SSP by refunding eligible SSP costs. Employers with fewer than 250 employees will be eligible. The size of an employer will be determined by the number of people they employed as of 28 February 2020. We are confirming with government whether or not this definition includes charities as well as businesses.

Small grant programme for SMEs

A £3,000 cash grant will be available for Small and medium sized enterprises – those eligible for small business rate relief. We will be working with others across the sector to lobby for similar measures for those eligible for charitable rate relief too.

Poor economic outlook and investment in infrastructure

The top line from the budget was a loosening of fiscal policy. The government is now much more relaxed about government borrowing to fund public spending. This is a clear break from the principles underpinning the austerity of the last decade.

This represents a significant increase in spending and a big change of direction. But the austerity years’ cuts to social security and local government remain in place – so for Locality members, much of the practical context remains relatively unchanged

Much of this new government spending – totalling £18 billion – was announced in the 2019 Spending Review. However, combined with the £12bn for Coronavirus, this represents a large fiscal stimulus – bigger than many other countries in Europe.

It suggests the government is wary of the threat of recession – off the back of lowered growth rates predicted by the Office for Budget. Responsibility and the economic impact that coronavirus is already having on the global economy. Locality members should be alert to this backdrop and factor this into forward scenario planning.

A new emphasis on an imbalanced economy

We are pleased the Chancellor recognises our imbalanced economic model, which we know hasn’t benefitted all places equally. We worry that some of the measures announced risk relying on the traditional approaches which have led us here in the first place.

An example of this is the contrast between spending on new green infrastructure – £1bn new investment in green transport solutions and £1bn extra a year in flood defences – and the £27bn investment in roads and the continued fuel-duty freeze. Miatta Fanbulleh, Chief Executive, at the New Economics Foundation drew this comparison to point to the gap between the rhetoric of a ‘green budget’ and the spending decisions contained within it.

We’ve heard from our members time and time again that big-ticket infrastructure projects struggle to reach poorer communities. And increasing cash alone won’t deal with root causes of pressure on public services and rising poverty.

Devolution back on the agenda

Rishi Sunak announced a new devolution deal for West Yorkshire, with a directly-elected Mayor for the region and increased powers for existing mayors. In supporting budget documents, the government confirmed they will publish an English Devolution White Paper in the summer, “setting out how it intends to meet its ambition for full devolution across England”.

We will be working to ensure that this turbo-charged devolution agenda, focused on new regional structures and new powers for existing areas, goes hand in hand with a strengthening of neighbourhood-level powers for communities.

Notable omissions – Community Ownership, Community Housing and the UK Shared Prosperity Fund

The Community Ownership Fund, announced in the Conservative manifesto, wasn’t mentioned in the budget. Lots of things in the Conservative manifesto won’t have made it into the first budget, so it’s not out of the ordinary. However, it’s a missed opportunity to signal strong top-level political commitment to community power. We will be working closely with officials at MHCLG as they begin work on the specifics of the Fund.

Community Housing Fund

We were disappointed that the government didn’t use this fiscal opportunity to provide more detail on the future of the Community Housing Fund (CHF). However, Thursday 12 March’s adjournment debate on community housing provides an up-to-date public statement from the government. We are working with officials at MHCLG to gain further clarity. We will also be using Comprehensive Spending Review process, which is due to conclude in July, to make the case for future funds to support community-led housing.

In good news, the government announced that the Affordable Homes Programme funding would receive additional funding to invest £12.2 billion in the five years from 2021. Some community-led housing providers who are at the build stage are eligible to apply for capital grants through this fund.

UK Shared Prosperity Fund

The UK Shared Prosperity Fund – the fund to replace EU Structural Funding – was mentioned in passing in the budget. This is something Locality and others have long been campaigning on. We’ve been arguing that the funding needs to put Communities in Charge, and avoid relying on traditional approaches to economic development funding which don’t reach places which often feel forgotten. In the budget, the government said that “the government will set out further plans for the Fund including at the CSR”.

A new spending review and other opportunities

The forthcoming devolution white paper, long-term reform of social care and the spending review all represent key opportunities to emphasise the importance of Locality members in tackling some of our knottiest social challenges.

Through the budget, the government announced an expanded spending envelope for the comprehensive spending review. They have committed to spending more as a percentage of GDP. In the months up to July, there will be a process to determine how this is allocated to different government departments. So, this represents a key opportunity to influence government direction over the course of this parliament.

It is through this process we expect opportunities to shape the UK Shared Prosperity Fund and lobby for an extension to the Community Housing Fund.

Other announcements

  • A new ‘economic campus’ in the North with over 750 staff from the Treasury, and the departments for business, local government and trade.
  • £200m of funding to local communities to build flood resilience. This will support over 25 local areas, urban, rural and coastal, from the North, the Midlands and the South, to take forward wider innovative actions that improve their resilience to flooding and coastal erosion.
  • £500m Hardship Fund so Local Authorities can support economically vulnerable people and households. The Government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through similar measures.
  • The government will commit £46 million from the Shared Outcomes Fund to provide improved support to individuals experiencing multiple complex needs, such as homelessness, reoffending and substance misuse.

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