Yesterday brought Chancellor Rachel Reeves’ first budget since entering government in the summer, and it brought a number of measures for the public sector. As outlined by Public Sector Executive, the government was aiming to encourage growth, whilst stabilising the economy in order to achieve national goals.
The devolved governments in Scotland, Wales and Northern Ireland were given their funding settlements, with the Scottish Government outlining how the budget is a ‘step in the right direction.’ Finance Secretary Shona Robison commented:
“We called for increased investment in public services, infrastructure and tackling poverty. This budget is a step in the right direction, but still leaves us facing enormous cost pressures going forwards. The additional funding for this financial year has already been factored into our spending plans.
“By changing her fiscal rules and increasing investment in infrastructure, the Chancellor has met a core ask of the Scottish Government. But after 14 years of austerity, it’s going to take more than one year to rebuild and recover – we will need to see continued investment over the coming years to reset and reform public services.
“Indeed, there is a risk that by providing more funding for public services while increasing employer national insurance contributions, the UK Government is giving with one hand while taking away with the other. We estimate that the employer national insurance change could add up to £500 million in costs for the public sector unless it is fully reimbursed – and there is a danger that we won’t get that certainty until after the Scottish budget process for 2025/26 has concluded.”
Wales’ government has outlined that the funding settlement it will receive thanks to this budget is in fact £1 billion higher than it would have received under the previous government. Alongside this, communities will be kept safer thanks to £25 million of funding for the Welsh Government to make coal tips safe.
Commenting on the budget, Finance Secretary Mark Drakeford said:
“This is a Budget focused on fixing the foundations; rebuilding public services and creating a pathway of investment for growth.
“It marks the first steps in the right direction after 14 years of economic mismanagement by previous UK governments and the impact its decisions have had on people and communities.
“It is clear the Chancellor is listening to what Wales needs. I look forward to working with the UK Government on our other priorities, including securing fair funding for rail.”
There was a significant call ahead of the budget for the Chancellor to use government funding to address some of the significant challenges across local government. As homelessness and social care pressures continue to mount, the next financial year will see councils benefitting from an additional £1.3 billion worth of investment to help meet some of the funding shortfalls. Despite this, the Local Government Association has outlined how the funding is a positive, but it must also be met with the fundamental reform of the SEND system.
Alongside the additional funding, a number of measures were confirmed by the Chancellor, including reform to the Right to Buy scheme, additional transport funding, and an extension to the Household Support Fund – which is integral in supporting communities with the cost of living. In response to the Budget, LGA Chair Cllr Louise Gittins stated:
“This is a step in the right direction, but councils and the services they provide to their residents still face a precarious short and long-term future. The Government needs to give explicit clarity on whether councils will be protected from extra cost pressures from the increases to employer national insurance contributions.
“Only with greater funding certainty through multi-year settlements and more clarity on financial reform, can councils protect services, meet the needs of residents and work in partnership on the Government's priorities, from social care to housing, inclusive economic growth and tackling climate change. We look forward to continuing to work in partnership with the Government to address these issues for councils and communities.”
Also commenting on the additional funding for social care, was the President of the Association of Directors of Adult Social Services, Melanie Williams. Williams welcomed the increase in funding for social care, however she also outlined some potential issues with the new money being used to cover increase employer national insurance contributions and the increase to the national minimum wage. Williams said:
“In reality, the new money announces may end up getting used to cover employers’ national insurance increases and wage increases amongst providers. On this basis, we look forward to further discussions with government on the high demand for adult social care we are facing, and how this relates to the NHS and SEND. We welcome conversations about the NHS 10-year plan, neighbourhood health and the NHS settlement to understand how funding will flow through and reach people who need it, helping the government to achieve its strategic shifts in health and social care - from hospital to community, analogue to digital and treatment to prevention.”
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