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Blog 3rd March 2021

Mar 3rd, 21:22

Blog 3rd March 2021

In this blog I consider: The budget that was announced today by Rishi Sunak and its implications for public services including housing and local government; business planning for housing associations; and our webinars.

Rishi Sunak, the Chancellor of the Exchequer, delivered his budget today. He announced new measures to help business and jobs through the pandemic and to support Britain’s long-term economic recovery and a series of tax-raising plans to help rebalance the public finances in the long-term.

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The Houses of Parliament where Rishi Sunak delivered his budget

During 2020 the British economy shrank by 10%, with predicted growth of 4% during 2021 leaving it 6% smaller at the end of the year than it was at the end of 2019. 700,000 people have lost their jobs since the pandemic began and unemployment is expected to peak at 6.5% in 2022. The government will borrow a record of £355billion in 2020/21 followed by £234billion in 2021-22.

There were some welfare measures including:

  • The continuation of the ‘furlough’ scheme until September.
  • The £20 weekly uplift in Universal Credit worth £1,000 a year is to be extended for another six months
  • Working Tax Credit claimants will get £500 one-off payment
  • The minimum wage will increase to £8.91 an hour from April 2021

There was very little investment announced for public services. The investment that was announced included:

  • £1.65billion to support the vaccination rollout and £50million to boost the vaccine testing capability
  • £19million for domestic violence programmes, funding a network of respite rooms for homeless women
  • £40million of new funding for victims of the 1960s Thalidomide scandal and £10million to support armed forces veterans with mental health needs
  • Nearly £400million to help arts venues in England, including museums and galleries, to re-open
  • A new UK Infrastructure Bank will be set up in Leeds. It will have £12billion in capital and the aim to fund £40billion of public and private projects
  • A £1billion fund to promote regeneration in a further 45 English towns.

The budget was a disappointment for housing and local government.

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The Civic Hall at Leeds. The infrastructure bank will be based in Leeds but the City Council will get no additional powers or resources to enable it to revive the local economy.

It included no new resources or initiatives for adult social care despite advice from the Office for Budgetary Responsibility that:

“There is potential for further significant calls on central government to maintain local services in some scenarios…The pandemic hit the old-age social care sector particularly hard.”

James Prestwich, Director of Policy and External Affairs at ‘Inside Housing’ said that:

“We would have liked to have seen a much greater focus on a housing-led recovery, which we believe represents the best way for government to drive growth, help meet its ambitious climate change targets, create highly skilled jobs and alleviate the chronic housing shortage.

"We believe there remains a clear need to sustain the £20 a week Universal Credit uplift beyond the six months announced by the chancellor, and we’ll continue to make the case to government that they should look to mitigate the risk of this ending at a time when the economy is likely to remain fragile.

“The £12billion for a UK infrastructure bank will be valuable, although this doesn’t address the vital action required to upgrade the energy-efficiency of Britain’s housing stock and help tackle the climate emergency.”

Nick Golding of the ‘Local Government Chronicle’ said that:

“The longer-term future and salvage of public services didn’t get much of a look in.

“A couple of prestigious institutions and another new array of central funding pots for councils to get bidding for are insufficient to counteract neither Covid’s disproportionate ravaging of the poorer parts of the country nor decades of centralism. It is astonishing that a crisis of this magnitude has not brought about more fresh thinking along the lines of ‘Whitehall’s been rubbish at helping poorer places in the past, let’s empower them and give them the money to do it themselves’.

“Indeed, Mr Sunak appeared to be blinkered, seeing the future only through showpiece economic projects. Mr Sunak’s turning of a blind eye to the plight of local public services will impact most heavily on the poorest people in all regions: the opposite of the levelling up. Local services that have proven themselves during the pandemic for their ability to touch the lives central government fails to reach will further wither and decline.

“It is astonishing that something of the magnitude of this pandemic has been insufficient to shake the government into a different mindset. Hopes that Covid would lead to a radical new future along the lines of World War Two giving rise to the welfare state seemed more misplaced than ever before as a result of the 2021 Budget. And it’s not as if the chancellor isn’t splashing the cash around.”

I have written a briefing paper that considers Business Planning for Housing Associations. Business Plans have been defined as follows:

“A business plan has been defined as a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organisation or team attempting to reach those goals. Business Plans are prepared by private sector and public sector organisations.

“Business Planning is focused on two key processes. First, the strategic analysis that is required to identify the objectives of the business plan and what is required to achieve those objectives and Second, a long-term financial plan to realise those objectives.”

Business Plans are important in any organisation but are especially important in housing associations. Housing associations have considerable assets and are in business for the long-term, so an effective business plan is needed. Moreover, housing association business plans are closely studied by the Regulator and by the banks who provide much of the capital that is needed to acquire and develop housing.

Now is not only a good time to revise and update business plans. It is essential that this be done so that housing associations can be responsive to changing government policy and other significant uncertainties in the environment in which housing services are provided.

This requires a new way of business planning including a robust approach to the development of strategy, financial forecasting, sensitivity analysis, risk management and contingency planning.

Your copy can be freely viewed or downloaded by clicking here.

I have also updated my briefing paper ‘Introduction to Local Authority Housing Finance (capital)’. Your copy can be freely viewed or downloaded by clicking here.

We will be holding several webinars over the next few months on subjects relevant to public services, local government, and housing. For further information or to make a booking, please click here.

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