The Budget and Spending Review: Big Ticket Items and Rural Impacts

The RSN has reviewed the 27th October, 2021 Budget and 3-Year Spending Review to try to ascertain rural impacts

In truth an impossible task, as both are at such a high level that doesn’t support such analysis.

It is also difficult to easily unpick genuinely new announcements from re-statements of commitments already made and just re-confirmed through the Budget/Spending Review

But here we go:

1. FUNDING LOCAL GOVERNMENT SERVICES

• Clearly good news for local government as a whole that the allocation to DLUHC is better than anticipated. However, until we see the Provisional Settlement in December the allocations to individual Councils and urban compared to rural cannot be known. Most new funding pressures will have to be funded from the grant allocation.
• We do know that rural areas will not receive a fair share of Government Funded Spending Power as the distributional formulae creates that outcome. There was no mention of the timing for the Needs and Resources (Fair Funding) Review being progressed
• This year urban areas have received some 61% (£107) more per head than their rural counterparts whilst on average rural residents have paid 19% (£96) more per head in Council Tax.
• Rural areas already fund more of their council services through council tax than urban. This is likely to get worse.
• No news on the new Homes Bonus -of critical importance to Rural District and Unitary Councils.
• The split of new funding between Social Care and other services is not yet known

2. FUNDING OF OTHER PUBLIC SERVICES

• The formulae for distribution funding to Police Services, Fire and Rescue Services, the NHS, and Public Health all show the same urban bias as the local government formula
• The increase in schools funding is welcomed – but only takes the funding level back to that of 2010 – so no overall real terms increase for more than a decade.

3. MORE FUNDING FOR AFFORDABLE HOUSING

• On the face of it a very welcome announcement but the affordable housing mentioned (£11.5Bn from 2021-2026 to build up to 180,000 new affordable homes – with 65% for homes outside of London) is to support home ownership. The need across rural areas is overwhelmingly for Social Housing at rents affordable on locally earned incomes. Those are the homes needed by key workers supporting rural communities (including retained fire fighters, teachers, health workers, lifeboat rescue workers)
• The changes to the rules for how Local Authorities can re-invest Right-to-Buy receipts are welcomed and are something the RSN has been calling for. They do not go far enough, however.

4. DISTRIBUTION OF OTHER MEASURES

• Until the details of where and how the commitments to improved health services, training and upskilling, youth services, local roads upgrades etc are known we cannot see the extent to which rural areas/communities will benefit

5. LEVELLING UP FUND ALLOCATIONS

• The details of how funds have been prioritised is not yet available
• 13 RSN members were allocated funding and our congratulations go to them
• On a pounds per head basis Predominantly Rural areas have received marginally more than Predominantly Urban
• The funding has gone to capital expenditure schemes
• The RSN continues to press that Levelling Up must be about more than capital projects. We will have to see what the promised Levelling Up White Paper brings including details of the metrics to be used

6. UK SHARED PROSPERITY FUND

• The UKSPF will only reach EU levels of funding by the end of the Spending Review period, not from next year as originally promised also no further detail was provided about the delivery of the fund.
• On Table 4.8 (p106) under departmental spending for DLUHC it states for the UKSPF that the following allocations are to be made:
  - 2022/23: 0.4bn
  - 2023/24: 0.7bn
  - 2024/25: 1.5bn
• The vast majority of this is resource, rather than capital and there is nothing to say that it’s been rural proofed. We seem to have lost £1.9bn over the three years of the spending review.

7. FUEL DUTY

• No increase in Fuel Duty was certainly very welcome news for rural service providers, rural businesses and communities.
• It must be remembered, however, that vehicle fuel has risen in cost very significantly in recent months. The impact of those cost increases will be felt far more in rural areas for obvious reasons impacting greatly on service providers, businesses and residents.

8. OTHER

• First 105 projects awarded support from the Levelling Up Fund announced
• No update provided on the UK Community Renewal Fund (the pre-cursor to the UK Shared Prosperity Fund (UKSPF), the replacement programme for EU funding)
• Business Rates: 50% relief for Retail, Hospitality and Leisure sectors in 2022-23, £110,000 cash cap

You can access related material below:
- Autumn Budget and Spending Review 2021 - Speech
- Autumn Budget and Spending Review 2021 - Documents