Budget 2024 - Devon reacts to 'glass half-full' Budget

'We must hold the government's feet to the fire'

Devon’s councils and MPs have pledged to hold the government to account after a ‘glass half-full’ budget which promised extra funding for local NHS projects and improvements in rural fast broadband.

Labour chancellor Rachel Reeves outlined spending plans which she said would address a ‘black hole’ in the country’s finances and raise £40billion.

Headlines included an increase in the amount of National Insurance paid by employers, along with a freeze on income tax and National Insurance thresholds for employees. Capital gains tax goes up, fuel duty is frozen and private school fees will attract VAT from January.

There will be a £22.6billion increase in the health budget and £5billion in house building investment.

Conservative leader Rishi Sunak said it was an enormous borrowing spree which contained ‘broken promise after broken promise’.

Torbay’s Liberal Democrat MP Steve Darling welcomed investment in health and education. “It’s a glass half-full budget,” he said, but then warned: “The devil will be in the detail.”

HEALTH

South Devon Liberal Democrat MP Caroline Voaden said the extra funding for the NHS announced in the budget must deliver improved services for local people including extra GP and NHS dentist appointments.

And she pledged to ‘hold the government’s feet to the fire’ to make sure they delivered on their promises.

“Fixing the crisis in our NHS is literally a matter of life and death and is vital for growing our economy,” she said. “I have consistently campaigned for more investment in our local health services and I’m glad the chancellor has finally listened.

“But the new government is at risk of repeating the mistakes of the Conservatives by ignoring the crisis in social care. The announcements made today will not even touch the sides of this crisis. Unless we agree a long-term solution to social care, we will never fix our NHS.”

Mr Darling agreed, saying: “We must hold health secretary Wes Streeting to account, and make sure our new hospital programme is part of the funding.”

Local MPs have been urging the new government to make good on the previous administration’s promises to rebuild crumbling Torbay Hospital, where regular sewage leaks are among the issues.

“I cannot imagine that a secretary of state is happy to have a hospital on their books with problems like that.”

NATIONAL INSURANCE

Aims that changes in National Insurance will not harm working people have been described by one Devon council leader as ‘disingenuous’.

Chancellor Rachel Reeves announced in her budget that while employees would not have to pay any more in their wage packets in contributions, employers would have to take up the slack with increased contributions from their end.

Critics say that could mean hardship for businesses and put jobs at risk.

South Hams Council leader Julian Brazil (Lib Dem, Stokenham) said: “It is disingenuous to say that it is not going to affect working people when it will clearly affect their employers.

“Some of the really struggling businesses in the leisure and tourism industries will be hit hard.”

The budget also included an increase in capital gains tax along with a freeze on the threshold for inheritance tax.

“I’m slightly disappointed that capital gains tax isn’t going to include houses. That’s a tax on wealth, and we should be encouraging that more than a tax on work.”

Exeter City Council leader Phil Bialyk (Lab, Exwick) welcomed the decision not to raise National insurance contributions for the smallest businesses.

“They won’t suffer at all,” he said. “Some of the bigger employers will feel it, though. They will find themselves paying a bit more.”

Torbay MP Steve Darling said there was a danger that changes to the National Insurance system could damage the economy.

He said: “The real hope for the new Labour government is that it stops economic stagnation. They inherited a world in which the economy had gone backwards.

“What we need to see is economic growth, because that’s the way the chancellor should be able to fund public services in the longer term.

“But the danger is that the introduction of this change to National insurance could actually stifle growth.”

BUSINESS AND FARMING

Devon’s leader James McInnes has criticised the Budget for hitting businesses and growth.

Cllr McInnes, who leads Devon County Council’s Conservative administration, said the Budget by chancellor Rachel Reeves was an “an attack on enterprise and growth”.

“Devon's economy relies on our small businesses with the vast majority of employees working for firms with less than 50 staff,” he said.

“And many more of our residents work for themselves - and work hard to make a living - with nearly 16 per cent in self-employment compared with just over 9 per cent nationally.

“And that figure is much higher in rural Devon.”

He said data showed Torridge has the highest self-employment in the county with 23.9 per cent, West Devon 19.5 per cent, South Hams 19.3 per cent, North Devon 18.6 per cent and East Devon 16.4 per cent.

“So the rise in employers' National Insurance, the profusion of new labour laws and the increases in minimum wage are going to hit our small businesses hard, especially in our vital hospitality sector,” he added.

“They are the very enterprises that we rely on to drive growth by expanding, taking on more people and paying more tax - which is the only way we will pay for better public services.”

The Budget outlined that employers’ National Insurance contributions will rise by 1.2 percentage points to 15 per cent and the rate at which firms start paying it for each employee will drop to £5,000 compared to £9,100 now.

The chancellor added that to “support small businesses”, the employment allowance would be raised from £5,000 to £10,500, meaning 865,000 employers would pay no National Insurance contributions next year.

Cllr McInnes, a former farmer, also commented on inheritance changes that could impact some farmers.

"I also fear our family farmers will be badly affected by the changes in inheritance tax on passing on their farms to the next generation,” he said.

While the 100 per cent relief on agricultural property will continue for the first £1 million, it will be 50 per cent for the remaining value above that figure.

BROADBAND

Cllr Brazil welcomed an announcement of increased funding to improve rural broadband but agreed that, as with much of the budget, the devil would be in the detail.

“It’s very welcome, but let’s hope they do a better job than the last administration,” he said. 

“The private companies have run rings around us, and they have just used the funding to put it into areas where there are already lots of people. You can find three or four different fast broadband providers in the towns, but none in the countryside.

“Fast broadband is vital for homes, schools and businesses.”

SPECIAL EDUCATIONAL NEEDS SPENDING

More cash for special educational needs and disabilities has been welcomed by Devon after the government pledged an extra £1 billion nationally.

Chancellor Rachel Reeves said the special educational needs and disabilities (SEND) system would receive the extra cash to help support children who need greater support at school.

James McInnes (Conservative, Hatherleigh and Chagford), the leader of Devon County Council, said the extra money for vulnerable children with special needs was “welcome”, but suggested widespread reform of the SEND system was still required.

 "We await further clarity from the Government on what Devon's share of this extra cash (for SEND) will be,” he said.

"I would also reiterate the conclusions of the National Audit Office that the whole system of special needs education requires urgent reform.

"Whilst I welcome this extra money for Devon County Council, I need to point out that the increase in National Insurance will cost us an extra £4 million next year and the above inflation rise in the minimum wage will add some £9 million to what we had already budgeted for."

The extra funding for SEND comes as a rising number of councils have been relying on an emergency government cash injection to help them reduce their SEND-related deficits.

Devon County Council’s SEND deficit surpassed £160 million this year, leading the authority to apply to the government’s Safety Valve scheme.

This resulted in Devon securing a £95 million bailout over nine years, cash that comes with strings, such as savings and reform requirements.

There was no mention, however, of how councils can deal with their SEND deficits.

As it stands, councils can keep any deficit linked to SEND ‘off balance sheet’ essentially meaning they keep it separate from their main finances.

But the ability to do this only runs until 2026, unless the government decides to extend it at a future date.

The extra £1 billion from the chancellor for SEND nationally was part of a funding increase for education of £11.2 billion from 2023/24 levels by 2025/26, something the government called a 3.5 per cent real term increase.

Other portions of that cash will go towards expanding government funded childcare (£1.8 billion) and further education (£300 million).

And £6.7 billion of capital funding in 2025/26 is included for education in England, within which is £1.4 billion for the school rebuilding programme.

BUS FARES CAP

Confirmation in the budget that the £2 single bus fare cap will be upped to £3 has been described as going ‘in completely the wrong direction’.

Exeter Green Party campaigner Thomas Richardson, said: “What we need is a budget that puts us on the road to a fairer, greener transport system. Increasing the cap to £3 is a massive cost-of-living hike for those reliant on buses and sends out totally the wrong signal on encouraging a shift from car travel to public transport.” 

And Exeter city councillor Carol Bennett (Green, Heavitree) added: “As a non-driver with a disability I rely heavily on buses, as do many people in the city.

“As a former bus driver, I hope Labour council leader Phil Bialyk will take the government to task over this."

But Cllr Bialyk (Lab Exwick) said the budget had been generally well put-together, and many people would feel the benefit of the chancellor’s strategy.

“I think it has been a good and well-constructed budget,” he said. “I don’t think £3 is too much to pay for a long journey. You can get from Newton Abbot to Exeter for £3.

“And pensioners won’t be hit by this, because they don’t pay anyway!”

EDUCATION

Liberal Democrat MP Richard Foord has said he will be pushing for much-needed cash for a Devon school’s rebuild after the chancellor pledged extra funding for education.

Mr Foord, who represents Honiton and Sidmouth, said he would be “reminding” the education secretary about the plight of Tipton St John primary school in light of Rachel Reeves’ decision to put £6.7 billion towards rebuilding schools.

“It’s encouraging news about the £6.7 billion investment in capital for schools,” Mr Foord said.

“Tipton St John school has been beset by flood risk for years, with the Environment Agency declaring a risk to life a decade ago.

“The Conservative government made various promises but delivered little, so I very much hope that there will be positive news for the residents of Tipton St John, with the funding made available for them to rebuild the school outside the flood zone and within the village.”

The village’s former MP, the Conservative Simon Jupp, had campaigned on the issue, and earlier this year welcomed the-then education secretary Gillian Keegan to the school to urge that work begin quickly.

The Department for Education’s preferred location for a new school is two miles away, but campaigners who oppose this are growing louder.

In September,  villagers presented Devon County Council with a petition containing nearly 1,000 signatures.

The £6.7 billion for capital spending on schools came as part of an £11.2 billion education spending pledge by the government.

RIGHT TO BUY

Changes around how much discount social housing tenants get when they buy their homes has been cheered by East Devon’s leader.

Chancellor Rachel Reeves outlined changes in her Budget that will mean those social housing tenants seeking to buy their homes from their local councils will now get less money off than they do now.

At present, the average discount is £72,000 nationally, with a maximum outside London of £102,400.

But Ms Reeves wants to take discounts back to 2012 levels, meaning maximum price cuts in the South West region would be £30,000.

Ms Reeves also announced that councils will no longer have to give a portion of the cash they receive from such transactions to the government, a policy that will mean more than £1.1 billion staying in town hall coffers nationally between now and 2029/30.

Paul Arnott (Coly Valley), the Liberal Democrat leader of East Devon District Council, said: “That’s a really welcome change, and it is absolutely the right thing to do.”

“We have been writing to the government for years asking for the ability to retain Right to Buy receipts and for the discounts to be reconsidered, as not doing so means we have been giving stock away.”

The discount tenants get is meant to represent the rent the tenant has already paid to the council before buying the home, but the government has said the formula that dictates how much of a discount tenants get has hampered investment in social housing.

Between April 2012 and March 2021, councils had a target to replace the amount of homes sold; that was 62,485, but only 47,864 were replaced – a shortfall of 14,621.

Furthermore, the government estimates that if discounts were kept where they are now, average annual sales of council homes to their tenants would number 7,000, and the number replaced only around 3,000-4,000.

The government believes taking discounts back to 2012 levels – making them less generous – would mean average annual sales of 1,700 a year, making it more likely that councils could replace those social homes.

The changes are due to take place on November 21.

The size of the discount available now and under the changes is linked to various factors, most notably how long the tenant has lived in the property for.

Right to Buy (RtB) was a flagship policy of former Conservative prime minister Margaret Thatcher, and gave 5 million council house tenants in England and Wales the ability to buy their home.