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As it happened: July Budget

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Chancellor George Osborne is expected to announce progress on a number of new devolution deals as well as plans to make social housing tenants earning above certain amounts pay higher rents. Read our full round up of what to expect here.

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15.56pm The Chartered Institute of Public Finance and Accountancy’s chief executive Rob Whiteman has called today’s announcement “an ambitious Budget from a confident Chancellor”, which presented “unique challenges to the public sector”.

He said: “The reforms to social housing will be of real concern to the sector. This reduction to rents, while initially driving down costs for central government, will have large implications for the future stability of the social housing sector. Many organisations will be looking at their business cases and the housing they had hoped to build, some may now be concerned that their plans are no longer be viable. If the government wants to truly tackle substantial increases in the housing benefit bill it must also look beyond the social housing sector and should address the rising cost of rents in the private sector.”

Mr Whiteman added that the government’s welfare reforms were “ambitious” and that the cost of them “must not simply be transferred to other public services and the third sector”.

15.42pm Citizens Advice has issued a statement warning of the “very serious” impact of the social security cuts and changes on people on low incomes.

“Cuts to welfare including freezing benefits for four years, lowering income disregards and work allowances, and cutting tax credits will all have a very serious impact on many people’s ability to meet day to day costs,” says its chief executive Gillian Guy.

15.22pm Treasury plan to force social landlords to cut rent levels by 1% a year for four years will have knock on effect on affordable house building rates, warns a review of the Budget by the Office for Budget Responsibility. “We expect that this [the rent curb] will reduce their [social landlords’] ability and willingness to invest in housing…we have lowered our forecast for residential investment, proportionate to the expected reduction in rental income,” it adds.

“The effect is to reduce the level of private residential investment by around 0.7 per cent by the end of the forecast period, which is broadly consistent with a reduction in housebuilding of 4,000 in 2020-21. Over the forecast period, our assumptions suggest around 14,000 fewer affordable homes will be built. We do not expect private sector house-builders to offset this effect to any material degree”.

15.07pm Detailed stories on changes to social housing rents, public sector pay and proposed new rules for the local government pension scheme are now live.

15.03pm Solace spokesman on economic prosperity and housing, Martin Swales, who is alsochief executive of South Tyneside MBC, warned propsal to raise rents on higher earning council tenants could have unintended consequences.

“This policy, expected to affect 340,000 households nationally, could incentivise tenants to take up to the ‘Right to Buy’ scheme (which is already to be extended by the Government to around 1.3m housing association homes in England). In turn however, it could exacerbate the current housing challenges nationally - resulting in further reductions in numbers of social housing available to potential tenants - currently 1.8m households sit on social housing waiting lists.

“As a result Solace would therefore welcome the opportunity to open positive dialogue with the Government, so that together we can do more to increase social housing supply.”

15.02pm Graeme McDonald, director of Solace, said: “The living wage is a policy pioneered across many councils and its broader use is to be welcomed.

“Local government will need support to ensure services for vulnerable children and adults are up to the challenge brought by further reductions in welfare spending, and that the push to greater home ownership amongst social tenants is backed up by a commensurate ability to supply the homes required to fulfil duties to those on housing waiting lists.”

He added: “However, looking ahead to the Autumn Spending Review, this remains the real opportunity for the government to fundamentally rebalance its relationship with local government; working with us to chart our course to self-sufficiency.”

14.59pm Matthew Reed, chief executive of The Children’s Society, said:“Far from introducing a ‘one purpose, one policy, one nation’ as the Chancellor boasts, the Government today has split the nation. Today’s budget is a disaster for low-income working families. 

“The chancellor has said this is a budget for working people, but he has hammered the hopes of millions of children living in poverty. Today’s budget was all about numbers — not people.”

14.57pm Jon Sparkes, chief executive of the homelessness charity Crisis, said: “These short-sighted cuts to housing benefit are likely to push more and more people into homelessness and could end up costing the taxpayer even more than they save.

“We are particularly worried about cuts to housing benefit for 18-21s. Under-25s already make up a third of homeless people and there is a real danger these changes could make things even worse. For many young people, living with their parents simply isn’t an option. Housing benefit can mean keeping a roof over their heads while they look for work and get their lives back on track. While we welcome the proposed exemptions to protect the most vulnerable, the Government must make sure that those at risk of homelessness don’t slip through the net.”

14.46pm Simon Bottery, director of policy at Independent Age, questioned what impact raising the inheritance tax threshold would have on the planned introduction of a cap on care costs paid by individuals as part of the Care Act.

He said: “The decision on inheritance tax must raise serious questions about whether the government’s flagship social care policy – the £72,000 ‘cap’ on individual’s care costs – will go ahead in April 2016 as planned. This was intended to be paid for in part, by freezing inheritance tax thresholds. The Chancellor needs to clarify urgently whether the measure will proceed since local authorities are already planning for its implementation.”

14.28pm Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “We support the government’s ambition of building more homes and helping people realise their aspirations of home ownership and work – but not at any price.  We welcome the announcement of the new national living wage, which could help reduce the number of working people being drawn into the benefits system.  But we are concerned that some of the measures announced today such as the far-reaching benefit cuts are going to make it more difficult for people to keep a roof over their head and affect the number of new homes built.”

14.23pm Commenting on the announcement of devolution to Cornwall, Saffron Cordery, director of policy and strategy at NHS Providers, said: “The announcement of devolved services in Cornwall follows in the mould of ‘DevoManc’. As with the Manchester devolution, there is a need to ensure that there is appropriate and full engagement with healthcare providers in the region, and that there is clarity about the roles and functions of all involved.

“The clear accountability of every organisation is paramount. It is also important to ensure that the current legislation bill is sufficiently enabling, rather than prescribing an approach based on experience of one or two localities. And with the integrated commissioning that will take place between health and social care in Cornwall, we anticipate with interest what the long term strategy will be around specialised commissioning later this year, as devolution is rolled out.”

14.09pm Iwan Griffiths, PwC’s North West chairman, said: “This Budget shows further commitment from the Government to devolve powers and budgets to boost local growth. It strongly indicates the support to reform public services so they deliver better outcomes for citizens.

“In terms of growth, the land commission model will be a good opportunity for Manchester to sustain its significant progress in housing. In terms of public services reform, enabling stronger local leadership of fire and children’s services, as well as employment programmes, has the potential to make those services even more effective and efficient.

14.06pm Tom Stannard, deputy chief executive of the National Institute for Adult Continuing Education said: “The budget was clear on the pace of cuts - £20bn over five years rather than the £13bn over two promised in the last budget. With the NHS topping the priority list the outlook for ‘unprotected’ departments in skills and local government is far from rosy.

“We welcome the commitments to new apprenticeships and the further devolution of employment programmes in Manchester. But the lack of protection for post-24 skills funding - essential to fixing the productivity challenge - raises big challenges for labour markets across the UK. The continued pressure on welfare budgets means councils and colleges still face huge challenges supporting citizens of all ages to meet the chancellor’s challenge to ‘earn or learn’.”

14.02pm Paul Martin, Society of Local Authority Chief Executives and Senior Managers finance spokesmanand Wandsworth LBC chief executive said: “The Government continues to place local authorities at the centre of the deficit reduction programme, and therefore the skills and expertise of council chief executives and senior managers will be more important than ever in the coming spending review period.

“Chief Executives will need the full support of all Government departments, regulators and inspectorates as well as public sector organisations outside local government control to work with us. We now enter the second phase of deficit reduction with a track record for innovative cost reduction that is unique in UK public services.”

14.01pm Responding to the chancellor’s Budget, Gary Porter (Con) chair of the Local Government Association, said: “It is right that the chancellor has not used his Summer Budget to further reduce in-year local government funding. Councils already have to find £2.5 billion in savings this financial year and these are proving the most difficult savings to find yet.

“Councils will now be looking to the Spending Review in the autumn which will decide the future of our public services over the next decade.”

13.55pm The County Councils Network have welcomed the announcement of a devolution deal for Cornwall, in a statement which refers to “billions of pounds” of devolved spending. The statement says the deal will include “control of the franchising of bus services, infrastructure and skills investment, and hundreds of millions of pounds of EU funding”.

CCN director Simon Edwards said: “Given the potential benefits of devolution to county areas we strongly welcome the historic deals which have been announced today. These are ground-breaking, not only in enabling real service reform and sustainable growth in their localities, but in setting a precedent for the empowerment of county communities across the country.”

13.39pm Osborne declares Conservatives are the party of working people and sits down to cheers from his party.

13.36pm Osborne announces introduction of a new national living wage to reach £9 an hour by 2020. It will start next April at a rate of £7.20. “Britain deserves a pay rise and Britain is getting a pay rise,” Osborne says. He is forced to repeat himself due to noise from opposition. Osborne says cost to business will be offset by cut in corproration tax while small business will get additional relief in national insurance contributions.

13.35pm LGC’s Sarah Calkin tweets:

Increase in defence spending not good news for local government as it increases the amount of cuts DCLG will have to bear#budget2015

13.34pm Chancellor announces additional funding for the defence budget.

13.33pm Osborne announces changes to income tax thresholds.

13.32pm New welfare reform and work bill will be published tomorrow to introduced social security cuts and changes

13.30pm Osborne: “These changes to tax credits are not easy but they are fair.” Five out of ten families to get support in future, rather than nine out of ten at the moment.

13.29pm Families who have a third or more child after April 2017 will not receive child benefit or access to other benefits.

13.27pm Benefits cap to be reduced to £23,000 in London and £20,000 elsewhere and higher income social housing tenants will be expected to pay market rents.

13.26pm Osborne says fourth principle of welfare reform: benefits system should not support lifestyles and rents which are not available to the taxpayers who pay for that system

13.25pm Rents paid in social housing sector will be reduced by 1% a year for the next four years.

13.23pm Now to tax credits, which are now costing £30bn a year. Benefits to be frozen for four years.

13.21pm Osborne confirms manifesto commitment to introduce 30 hours of free childcare.

13.20pm Confirms entitlement to housing benefit for 18 to 21 year olds will be abolished, except for the most vulnerable. this age group will have to either “earn or learn”, Osborne says.

13.19pm Setting out principles for welfare reform: Welfare should always support vulnerable, elderly and disabled. Second principle: those who can work should look for work and take it when it is on offer. Third principle:  working age benefit system has to be put on more sustainable footing.

13.18pm Osborne coming onto welfare spending. He says UK spending on welfare is “not sustainable”. He says universal credit will transform lives.

13.17pm Osborne announces plans to cut corporation tax to 18%.

13.13pm Chancellor announces he is publishing a green paper on future of pensions in a bid to “move from an economy based on debt to one based on savings”.

13.12pm Chancellor now announcing much trailled refrom to inheritance tax, increasing the threshold.

13.08pm Chancellor says talks underway with Sheffield, Leeds and North East about further devolution deals in return for directly elected mayors. He also refers to discussions with Cornwall on the first county devolution deal, as revealed by LGC last week.

13.07pm Chancellor onto northern powerhouse. Greater Manchester also to get fire services as well as “further collaboration” on areas including children’s services.

13.06pm HSJ’s Crispin Dowler tweets:

1/3 2 thoughts: the £8bn extra committed for NHS by Govt is worth more than prev thought if pay restraint going to continue for 4 years..

2/3 Because the #5yfv assumed that pay restraint could not continue for another parliament. #budget2015

3/3 BUT spiralling agency bill in NHS is a symptom of the NHS already struggling to recruit and retain staff after years of pay restraint

13.04pm LGC’s Rachel Dalton tweets:

No year in this Parliament will require cuts as deep as those in 2011/12 & 2012/13 #budget2015

13.03pm Government will introduce an apprenticeship levy on all large firms with money controlled by employers.

13.02pm Osborne says productivity is also about skills. He says its a “national shame” that skills of young people are no better than older people. He highlights plans to tackle coasting schools.

13.01pm Chancellor announces a roads fund that by the end of the decade will see all money raised in road tax used to improve roads.

12.58pm Osborne now talking about addressing the country’s productivity. A productivity plan developed by Treasury minister Jim O’Neill, who chaired the City Growth Commission, will be published on Friday.

12.53pm Osborne announcing plans to close the ‘non-dom’ loophole as part of measures to find £5bn through reducing tax avoidance.

12.51pm Osborne says there is trade off in the public sector between pay and jobs. HSJ’s Shaun Lintern tweets:

Breaking: Osborne says pay restraint will continue for next 4 years with only 1% per year for public sector workers. Ouch!#budget2015

12.50pm Osborne says the government’s priority is the NHS. £10bn more a year in real terms for the NHS by 2020. This is the £8bn committed to by the Conservative manifesto as well as the £2bn announced in last year’s autumn statement.

12.47pm Osborne says £37bn fiscal consolidation required over this parliament. He is announcing half today, including welfare cuts, and half in the spending review in autumn. This is when local government will find out about the cuts to departmental spending levels that will be passed on to councils.

12.47pm Osborne says more difficult decisions need to be taken to ensure a budget surplus. He claims those “with the broadest shoulders are bearing the greatest burden”.

12.46pm Osborne: Those who suffer when government run unsustainable deficits are not the richest but the poorest

12.45pm LGC’s Sarah Calkin tweets:

Osborne’s move away from “rollercoaster” cuts could provide some slight respite for local government if it means more time to manage cuts

12.40pm Osborne says the budget deficit is now less than half of what we inherited. Osborne says he will cut the deficit at the same pace as in the last parliament without a “rollerocaster ride in public spending”. This appears to be a change in profile of cuts to that announced in the March budget.

12.38pm Osborne highlighting increase in employment levels. “We set out today how we will make work pay”.

12.35pm Budget begins with the usual outline of the state of the economy. Mr Osborne references Greece and says Britain still borrows too much and spends too much. “We will be bold in transforming education… bold in building the northern powerhouse”.

12.34pm Osborne says this is a “security” budget for “hard working people”. A one nation budget that follows a “sensible path for the whole of the UK”, he says.

12.33pm Chancellor George Osborne stands up to begin the July budget, his first as chancellor in a majority Conservative government and second this year.

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