11.03.2024

Spring Budget 2024

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The Spring Budget, presented last week by Chancellor Jeremy Hunt, has sparked interest and concern among rural communities and their advocates. The Rural Services Network (RSN) has identified areas of potential benefit for rural areas while also noting significant gaps in addressing the unique challenges rural communities face. We aim to unpack the budget's implications for rural England, acknowledging both strides forward and missed opportunities.

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Levelling Up and Housing

The Chancellor announced the North-East trailblazer devolution deal, including Gateshead, Northumberland, and Sunderland as rural beneficiaries. However, despite these promising developments in the North-East, the overall focus of the Levelling Up funding and housing strategies as outlined by the Chancellor remains largely urban-centric. With significant investments, such as £188 million allocated to projects in Sheffield, Blackpool, and Liverpool, and a further £242 million for Barking Riverside and Canary Wharf to facilitate the construction of nearly 8,000 houses and the transformation of Canary Wharf into a life sciences hub, the disparity in funding allocation between urban and rural areas is starkly evident. These urban-focused initiatives, while critical for the nation's economic growth and innovation, emphasise a missed opportunity to equally address the housing and development needs of rural communities.

In response to the Chancellor's Spring Budget 2024, Kate Henderson, Chief Executive of the National Housing Federation, says:

"We’re disappointed that this year’s budget was not used as an opportunity to address the housing emergency and chronic shortage of affordable homes across the country.

The measures announced by the Chancellor to support families on the lowest incomes, including the extension of the Household Support Fund are welcome and will provide some relief for those who are struggling with the rising cost of living. However, with child homelessness at record levels and 1 in 6 children growing up in overcrowded homes with little space or privacy, urgent and meaningful action on housing is needed.

This housing crisis can be solved but it requires a change of approach. The government must put an end to short-term thinking and piecemeal policy decisions and commit to a national long-term plan for housing which aims to deliver the secure, affordable, high-quality homes local people need."

Beyond the budget measures, an important policy change, not directly included in the budget but significant for local government and social housing, demands attention. The chancellor has ended a scheme that previously allowed local councils to keep all proceeds from council home sales, effectively removing around £200 million a year from local housing budgets.

This move, contrary to advice from the Department of Levelling Up, Housing and Communities, tightens financial pressures on councils already struggling with budget cuts. It impacts efforts to tackle the housing crisis, at a time when the demand for affordable housing is acute, with long waiting lists and many in temporary accommodation.

This decision highlights the ongoing challenges local governments face in balancing immediate financial constraints with the urgent need for sustainable housing solutions.

Village Halls

The Chancellor’s announcement of £5 million towards the Platinum Jubilee Village Hall Fund for England is a win for rural communities. Such investments are crucial for sustaining the vibrancy and resilience of rural communities. We have expanded on this here.

Energy, Net Zero and Rural Opportunities

The budget’s allocation of up to £120 million to the Green Industries Growth Accelerator and £270 million to support advancements in zero-emission vehicles and clean aviation technology opens doors for rural involvement in the green economy.

Enhanced Support for the Arts

The government announced an allocation of £26m to the National Theatre for stage upgrades. Additionally, it will make permanent the elevated tax reliefs for performing arts, set at 45% for touring and orchestral productions and 40% for non-touring productions, to support the sector's recovery post-pandemic. We have expanded on what this here.

As we navigate the unfolding implications of the Spring Budget 2024, we remain committed to monitoring these developments closely. We will continue to engage with policymakers, community leaders, and rural stakeholders to advocate for policies that are equitable, sustainable, and responsive to the unique landscapes of rural communities.

A Boost for Small Businesses

The Chancellor revealed a £200 million funding allocation to extend the Recovery Loan Scheme into the Growth Guarantee Scheme, designed to assist approximately 11,000 SMEs in accessing necessary finance. Additionally, he announced an increase in the VAT registration threshold from £85,000 to £90,000, effective from April 1st.

The Federation of Small Businesses (FSB) welcomed these changes, particularly praising the increase in the VAT threshold and the cut to self-employed National Insurance Contributions. The FSB also acknowledged the broader package of support detailed in the Budget, including efforts to reduce administrative burdens and the extension of the Recovery Loan Scheme under a new name. However, despite these positive steps, the FSB expressed caution, highlighting ongoing challenges faced by small businesses, such as rising labour and input costs. They suggested that more measures were necessary to support small employers struggling to maintain their operations amidst these pressures.

For rural communities, the impact of these announcements could be significant. The increase in the VAT threshold and the extension of financial support schemes may alleviate some financial pressures, enabling rural businesses to invest more in their growth and development. This support is crucial for sustaining the vitality of rural economies, which often rely heavily on small businesses for employment and local services.

Holiday Lets

The announcement by the Chancellor to scrap tax breaks for second homeowners under the furnished holiday lettings regime represents a significant step towards addressing housing issues in rural communities. For years, the Rural Services Network has voiced concerns about the difficulties residents in rural areas face in finding affordable, long-term housing. The preferential tax treatment of holiday lets has incentivised property owners to cater to tourists rather than local populations, exacerbating housing shortages and inflating rental prices in rural regions.

Abolishing these tax breaks acknowledges the urgent need to realign the housing market with the needs of local communities, rather than those of the holiday market. This policy change is expected to encourage more property owners to offer their properties for long-term rental, thereby increasing the availability of affordable housing for permanent residents in rural areas. It's a welcome move for our communities, addressing a critical imbalance and potentially slowing the trend of rural depopulation due to housing unaffordability.

Transportation Costs and Rural Mobility

The budget’s approach to fuel duty, with a freeze and continuation of a 5p cut, offers some relief to car drivers, potentially saving them £50 next year. However, this measure, while beneficial on the surface, does not fully address the unique mobility challenges faced by rural communities. In areas where public transport options are limited, the reliance on cars and taxis is significantly higher, exacerbating the impact of transportation costs on rural residents.

Elsewhere, the Chancellor finally took a step forward to addressing the 'Taxi Tax', which will see 20% VAT added to minicab passenger fares. The announcement of the launch of a consultation in April is a result of mounting pressure from the Stop the Taxi Tax coalition, of which the Rural Services Network is a founding member. The campaign argues that this “harmful tax" must be stopped to avoid people and businesses being hurt. This is particularly important to our network as many rural areas already have less than 1 licensed minicab per 1,000 people and are likely to be left with no service at all if smaller operators are forced to close due to a rise in minicab prices.

Childcare: Accessibility and Affordability in Rural Areas

The expansion of childcare support, including the guarantee on rates paid to childcare providers, is a welcome move. Yet, the practicality of these measures for rural families, who often face greater challenges in accessing childcare services, remains a concern.

Local Government Impacts

The six-month extension of the Household Support Fund, supplemented by an additional £500 million, signifies the government's recognition of the ongoing need for support among the UK's most vulnerable populations. This extension represents a positive step forward in providing immediate relief. However, there is widespread concern regarding the long-term strategy and the measures being implemented to address the underlying causes of poverty and inequality. The emphasis on short-term assistance raises questions about the comprehensive plans to tackle these deep-seated issues, underscoring the importance of developing sustainable solutions that go beyond temporary relief to ensure enduring socioeconomic stability and equity.

Responding to the Chancellor’s Budget, Paul Kissack, Chief Executive of the Joseph Rowntree Foundation Said:

"The Government is right to acknowledge that deductions from Universal Credit which leave 97% of low-income families affected by these loans having to go without essentials are driving hardship in this country. They are right to take action on this dire situation, but they must now commit to a fundamental change in our social security system which guarantees that people can always afford the essentials."

A key point from the budget is the Chancellor's decision to maintain the forecast for real-terms public spending increases at 1% across the next parliamentary term. This spending could be skewed across particular departments, potentially leaving local government at a disadvantage and facing ongoing real term cuts. Detailed spending plans for the fiscal year 2025-26 and beyond are deferred to a future spending review, to be disclosed post-General Election, leaving some uncertainties for long-term financial planning within local government sectors.