Cllr Paul Swaddle is the Leader of the Conservative Group at Westminster City Council. We spoke to Paul after this afternoon's Budget. He explained,
Ahead of the Autumn Statement, I wrote to the Chancellor of the Exchequer highlighting the priorities of the people of Westminster, alongside detailing measures which would alleviate the challenges they are facing and steps that would boost businesses and our local economy. You can read that letter here.
It is with deep regret that neither the Chancellor of the Exchequer nor the Treasury has engaged with us, and there are several deeply concerning developments which were announced this afternoon.
Before the proceedings for the Budget began, at Prime Minister’s Questions, the Labour MP for Cities of London and Westminster, Rachel Blake, asked the Prime Minister about the rise of homelessness- an appropriate topic as it has a significant impact on our area and communities.
However, the Prime Minister’s response was severely disappointing, saying that the Government “will develop a long-term strategy”, demonstrating that they were not prepared to hit the ground running in tackling this issue after years of opposition, nor was there any mention of engaging with councils and holding the Mayor of London to account.
It is a relief that the Treasury appear to have heeded our comments and those from other council leaders that the budget for the local Governments should not be cut, however the increase today announced is unfortunately negligible in practice as the £1.3 billion figure is divided nationwide and we fear that it will have a limited impact once it finally reaches Westminster.
The £200 million amount for helping with homelessness, for example, falls significantly short of the £700 million black hole facing London Councils alone[1].
We are also relieved that following our letter the Chancellor of the Exchequer confirmed that there will be 40% relief on business rates for the retail, hospitality and leisure industry in 2025-26, though it is capped up to £110,000 per business so it is questionable how significant this relief will be for businesses based in Westminster.
However, the shock drop of the threshold at which businesses start paying National Insurance (NI) from £9,100 to £5,000 will be alarming for the hundreds of businesses in Westminster, alongside the further hit by the 1.2% hike in NI. This severely risks job losses and reduction in revenue for these businesses that play an integral role in vitalizing our high streets and local economy.
The Office of Budget Responsibility (OBR) warned that an increase in employer National Insurance will be passed through ‘entirely’ onto working people. “While the statutory incidence of employer NICs and the equivalent element of the levy is on businesses, we assume the economic incidence of the tax is passed through entirely to lower real wages in the medium term”[2].
Ms Kate Nicholls, Chief Executive of UK Hospitality, similarly shared her concerns in response to the Budget [3] : “In the short-term, the tsunami of employment costs coming in April will ultimately do more to hamper growth than incentivise it. Increases to employer NICs and wages will make it harder for businesses to support employment and invest in their businesses. All of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3 billion for the sector.”
Furthermore, these measures will result in unintended, although completely foreseeable consequences for council services. Care provider companies, and waste management companies such as Veolia will be affected by the NI hike who hold contracts with the council. This will result in increases to their costs which will inevitably be passed on to Westminster City Council and onto the taxpayers.
We also deeply regret that our request for the elimination of the “tourist tax” (VAT-free shopping for overseas visitors) was ignored, despite the New West End Company’s analysis demonstrating that it was responsible for £400 million worth of missed savings this year alone across Westminster.
We had requested that Westminster Council receive a multi-year settlement and whilst we welcome that there will be a move “towards a multi-year settlement for local government so local authorities can plan more effectively” for which we had campaigned, at best this will be drawn up in separate legislation next year therefore we will hold the Government to account to deliver on this commitment.
The Government are also dithering and delaying on the delivery of the New Hospital Programme, merely stating that it will set out by the Department of Health “in due course”. This will heighten the uncertainty regarding St. Mary’s Hospital in Paddington which the previous Government were committed to rebuilding, Professor Tim Orchard, Chief Executive at Imperial College Healthcare NHS Trust, and our urgent appeal on this matter have sadly fallen on deaf ears and our concerns kicked into the long grass.
This has also been the case on our campaign against the introduction of VAT on independent school fees, which will go ahead from January 2025. However, we welcome that one significant consolation, about which we strongly campaigned for, is that pupils with special educational needs whose needs can only be met in independent schools will be compensated for the VAT they are charged on their fees.
While the Government has committed to spending £8.6 billion on the so-called Great British Energy quango (GBE), this will come as little comfort to the people of Pimlico as GBE will not supply electricity directly to households and they are awaiting the replacement of the Pimlico District Heating Undertaking (PDHU) that supplies heat to over 3,000 homes. PDHU is owned and managed by Westminster City Council and its the oldest district heating system in the UK and its pipework is reaching the end of its life. We will continue to urge the Government to release the necessary funds to the Ministry of Housing, Communities and Local Government to upgrade the public electricity grid system to solve this problem.
Finally, on a more positive note, we are pleased that the successful Household Support Fund will be extended for a further year which will enable councils to allocate resources to the most vulnerable- yet it is worth noting that it was the previous Conservative Government that introduced the Household Support Fund in 2021.
This has helped nearly half a million meals for children during the school holidays and given emergency support to over 200,000 families across London since then according to the London Councils Association [4].
We will continue to hold the Government, the Mayor of London, and the Council to account and champion our residents’ priorities.
[1] https://www.standard.co.uk/news/politics/london-council-finances-budget-boroughs-bankruptcy-b1190837.
[2] https://obr.uk/box/the-economic-effects-of-policy-measures-17/
[3] https://www.ukhospitality.org.uk/ukhospitality-responds-to-the-budget-3/
[4] https://www.londoncouncils.gov.uk/news-and-press-releases/2024/household-support-fund-extension-hugely-welcome
