Autumn Budget - Acting Leader's response

Dear Chancellor,   

We’re writing today to firstly congratulate you on your first budget. Here in Islington, our vision is for a more equal future, where everyone has the same opportunity to thrive. While the budget offers hope that the Government supports that objective, we still face huge challenges in delivering the vital services our community needs and deserves – and it is through this lens that we view and respond to the budget. We look forward to working together to make meaningful progress toward this shared commitment. 

Fair Funding  

Islington has faced a huge level of Government underfunding over the past 14 years. Recent analysis shows that Islington’s reduction in real terms Core Spending Power since 2010 has been around £105 million, or 25%. Coupled with a growing level of demand for and cost of services annually, the council has had to deliver an unprecedented level of savings over the past 14 years to deliver balanced budgets. 

It is promising to see the £1.3 billion of additional grant funding, including £600 million of additional funding for social care. However, further clarity is required on the remaining £700 million to be allocated to the local government sector. Islington Council is the sixth most deprived council in London and the 53rd most deprived authority in the whole of England. We have the 10th highest rate of child poverty nationally (the highest in London) and the fourth highest rate of pensioner poverty in London.  Therefore, it is welcomed that there will be a deprivation focused element to the additional funding. The changes on employer national insurance contributions will increase the council’s expenditure considerably in 2025/26 – confirmation is sought as soon as possible as to whether there will be like-for-like compensation for these additional costs, over and above the £1.3bn additional funding announced. 

We look forward to the multi-year settlements from 2026/27 and the wider spending/fair funding reviews that you referenced in the budget, and we anticipate that this will support funding certainty within the budget planning process. We urge you to deliver these reviews in a way that gives real terms increases each year and that reflects the comparatively, very high needs and costs faced by Islington as a borough. This will enable the council to support, protect, and enhance essential services. 

Household Support Fund 

Islington Council has extensively campaigned for the continuation of the Household Support Fund, which provides vital support to vulnerable households. We were therefore heartened to hear the fund has been extended until 2025/26. We look forward to working together to ensure a long-term scheme is designed and implemented to ensure these households continue to receive the support they need. We also believe the changes to Carer’s Allowance are a positive step toward enabling more individuals with caring responsibilities to remain in the workforce while receiving greater support.  

Support for Adult Social Care  

As you are aware, the current system is not sustainable. In Islington alone, the cost of Adult Social Care is currently increasing by about £20 million each year. We are encouraged by the announcement that social care services nationally will receive an extra £600 million in Government grant funding next year, but request detail on how this will be fairly distributed. We ask that the Government create an ongoing settlement to ensure a resilient adult social care system that’s fit for the future and guarantees everyone the support and care they deserve.  

Special Educational Needs and Disabilities (SEND) 

We were pleased to see the Government’s commitment to improving SEND provision, as unfortunately the SEND system nationally is facing a crisis, with children, young people, and families struggling to access the support they need and deserve. Islington has experienced an 8.9% increase in children with an EHCP between January 2022 and January 2023, whilst also experiencing falling school rolls. Since 2018 we have seen an increase of 37% of numbers of EHCP’s. We were, therefore, relieved to hear that national SEND funding would be given an uplift of £1 billion as the current Islington high needs budget is under significant strain, despite sound financial management and a proactive education strategy focused on ensuring sufficiency of educational provision. We look forward to working with the Government on fundamentally reforming the SEND system to ensure a financially sustainable system where young people receive the support they deserve. 

Temporary Accommodation  

The council's homelessness budget in 2024/25 is £20.8m and, within this, it is forecasting an overspend on temporary accommodation of considerably more than £3m for the current financial year. This cost is rising in-year at an alarming rate. We believe that everyone in Islington deserves a safe, decent place to call home, and we're working tirelessly to support those sleeping rough. Tragically, though, we're seeing an increase in the number of people needing homelessness support, which has gone up by 35% in the first six months of 2024. There are currently 1,575 households living in temporary accommodation provided by Islington Council. We commend the inclusion of the £233m that was announced for 2025/26 to tackle homelessness and prevent rough sleeping. However, Islington’s allocation from this additional funding is unknown and may be affected by amendments to the current allocation methodology. We continue to urge Government to help ensure decent temporary accommodation for people in need by increasing Local Housing Allowance rates; awarding more Homelessness Prevention Grants; and building on successful Right to Buy buy-back programmes in Islington.     

Right to Buy 

We welcome the change to the rules to allow local authorities to keep 100% of Right to Buy receipts to reinvest in social housing. This policy will make more funds available to build new housing or repurchase existing properties. Additionally, lower discount rates reduce the incentive for buying council homes, which should help slow the loss of public housing stock to private ownership, where it often ends up in the private rental sector. 

The Government should maximise flexibility in how Right to Buy receipts can be used to reinvigorate the stock of council housing across England in every possible way. This includes making permanent the removal of the cap on the share of Right to Buy receipts which can be used to acquire existing homes and the ability for councils to combine receipts with section 106 contribution.  

The Government should also go further by lengthening the time councils and housing associations have to spend Right to Buy receipts before they are sent to central Government (or to Mayors) to ten years and allowing Right to Buy receipts to be mixed with all other sources of funding and finance for replacing council homes, including capital grant. Here in Islington, if we were able to use Right to Buy receipts alongside existing grants, we would be able to reduce the level of unsupported borrowing making it available to bring some of our pipeline schemes into the programme. It would transform the viability of schemes that currently are not affordable, and we could build more much-needed council homes. 

Affordable Homes Programme 

The £500 million additional funding for the Affordable Homes Programme is welcome. However, we will continue to advocate for the removal of red tape on the Affordable Homes Programme and other funds, including extending the strategic partnership model to councils. Funding should be streamlined, allocated simply, reflect recent cost-inflation, and allowed to be used flexibly to meet local housing need. 

Housing Revenue Account 

The Government’s extension of the discounted Public Works Loan Board (PWLB) lending rate for Housing Revenue Accounts (HRA) until March 2026 is a welcome measure that will help partially offset the impact of rising borrowing costs on the council’s HRA. However, to establish a truly sustainable HRA model, further support is essential. This includes an immediate capital funding injection of £644 million to compensate for income losses due to the 2023/24 rent cap, a secure and predictable long-term rent settlement, adjustments to HRA debt, and more favourable conditions for council investment. We urge the Government to consider aligning fiscal treatment for social housing investments with practices in other OECD countries to further enable local councils to meet housing needs effectively. 

Rent Settlement 

We welcome the Government's consultation on a proposed five-year social housing rent settlement of CPI +1%, as it aims to provide greater certainty for social housing providers. This proposed settlement, which would allow social rents to increase in line with Consumer Price Index inflation plus an additional 1%, is a positive step towards financial stability in the sector. While a five-year settlement would provide some stability and enable providers like us to make essential investments in enhancing the quality of existing housing stock and supporting future acquisitions, a ten-year settlement would provide the stronger, longer-term certainty required to plan and invest more effectively. Additionally, while this approach is encouraging, it will only partially offset the investments lost due to previous rent reductions. We look forward to learning and engaging further on the Government’s proposals for rolling settlements, which could enable longer-term investment planning for our 30-year business plan.  

Additionally, the Government’s provision of £46 million in funding to support recruitment and training in local planning authorities is a timely and valuable measure to bolster planning capacity. 

The Warm Homes Plan 

We were encouraged by the Warm Homes Plan, which allocates £3.4 billion towards heat decarbonisation and household energy efficiency over the next three years. As London’s second-largest landlord, Islington Council has a significant role in reducing carbon emissions through housing retrofits. We look forward to further details on the plan, especially around the allocation of funds and if it will address our ongoing lobbying for a dedicated Green and Decent Homes Programme. It is essential that a long-term, capital-funded initiative be put in place to bring all council housing up to new standards of safety, decency, and energy efficiency by 2030. 

The Extended Producer Responsibility Scheme and ‘new burden’s funding for food waste collections 

Following extensive lobbying by our Waste and Recycling Team, we were encouraged by the inclusion of £1.1 billion in new funding in the budget that will be allocated across local government after the successful implementation of the Extended Producer Responsibility Scheme, set to launch in January 2025. This grant will help councils cover the additional resources needed to enhance recycling efforts, ensuring they are well-prepared to meet upcoming goals. To enable effective planning for investment into improved recycling service, as the funding is intended, it is crucial that we have confirmation of Islington’s specific allocation as a matter of urgency. 

We note that there was no reference to new burdens revenue funding or interim support funding to support the requirements of the Environment Act 2021 for Local Authorities to collect food waste from households by April 2026 and again would urge you to ensure that individual Borough allocations are confirmed as soon as possible to ensure proper and effective planning and investment in this area. 

Growth and Skills Levy 

Islington Council has long advocated for greater flexibility in the use of the apprenticeship levy, allowing businesses to allocate funds toward training and salaries. Such flexibility is crucial to addressing London’s skills shortages and supporting the delivery of vital housing, transport, and digital infrastructure. We are therefore pleased to see the announcement of the Growth and Skills Levy, with £40 million allocated to support new foundational and shorter apprenticeships across key sectors. This reform will provide greater discretion over spending, enabling funds to be directed toward the areas of greatest need for organisations and their workforce. 

We share your vision for a country where everyone has the opportunity to thrive, and we are fully committed to working with you and your Government of service in the mission of national renewal. We are eager to hear the Phase 2 announcements around further reforms of SEND, business rates, devolution, and the funding regime. We would also welcome the opportunity to discuss how successful councils like Islington can play a key role in unlocking and advancing the Government’s core missions. 

We look forward to working together in the months and years ahead, as the steps are taken toward a fairer, more equitable society — principles that we hold deeply here in Islington. 

Yours sincerely, 

Councillor Diarmaid Ward 

Acting Leader of Islington Council