Spring Budget 2024: Public sector response

Phillip Woolley
Partner, Public Services Consulting

As expected, the Spring Budget hasn’t delivered additional funding for local government. The challenges facing the sector are well-rehearsed. While the additional £600m of funding provided in the 2024/25 settlement will be welcome, the sector will feel disappointed that the Spring Budget missed an opportunity to provide meaningful long-term funding solutions.

Given the current fiscal environment, there are several challenges for Government in providing additional funding for local government, and the lack of decisions made in the Budget are likely to lead to more financial distress. In the absence of additional funding being made available, the Chancellor announced a Productivity Plan for the sector to mitigate medium-term funding challenges by improving productivity. We believe that Government could help to ease at least some of the financial pressures facing the sector by developing a Productivity Plan specifically for local government. A future Government needs to focus on reorganisation, fiscal reforms, unlocking the potential of digital, social care reform, and addressing governance issues tackling fundamental, deep-rooted structural issues.

To achieve this our recommended five-point plan for local government after the General Election would be:  

Local government reorganisation

To address the significant capacity issues within the sector, where areas are not covered by existing devolution deals, Government should work with local government to explore opportunities for reorganisation aiming to remove duplication to enhance capacity. 

Fiscal devolution

Abolish the Council Tax referendum limit to allow greater flexibility and freedoms for local government to raise more revenues locally. Government should look to provide the framework for local authorities to generate other local revenues, allowing the innovation that can be delivered by an understanding of local geographies. 

Fiscal devolution – Along the lines of the trailblazer devolution deals, further transfer of funding to local government which would be better placed to make decisions about local priorities, particularly around transport and skills.  

As part of the fiscal reforms Government should deliver on multi-year settlements that would allow for a more robust planning process.  

Jason Hurst
Partner, Public Services Advisory

As expected, transport and infrastructure did not feature heavily in the Spring Budget, given a number of announcements had been made previously. This includes the recently announced £4.7 billion reallocated HS2 funding to transform transport across the North and Midlands. However, there were announcements of further devolution including the trailblazer deal for the North East.

Given the monies provided to enable devolution, local authorities will need to ensure that allocated spend goes on transport projects that deliver the greatest value for the travelling public and the taxpayer. Likewise, Central Government will need to ensure that value for money is achieved from such funding.

Recent funding for local authorities does help put decisions closer to those best placed to make them. This increased devolved decision-making should enable cities and towns to consider a more ‘place-based’ approach to transport where modes work better together. However, to deliver this there will need to be a shift in approach.

To find additional fiscal headroom for individual tax cuts the Chancellor extended existing taxes on the energy sector. This focused on extending the sunset on the Energy Profits Levy to 2029 – providing an additional year of funding from this tax.