CROYDON IN CRISIS: Labour’s first Budget in 14 years made no mention of councils with ‘toxic debt’ or any reframing of the central government’s settlement with local authorities. Political editor WALTER CRONXITE assesses what has been described as ‘a mixed bag’
Boxed in: £40bn of tax rises in Rachel Reeves’ Budget
Sad to say, but it looks like Rachel Reeves doesn’t read Inside Croydon.
Despite our best efforts to lobby the Chancellor, seeking her help to overhaul those vital engines of the national economy, local councils, to revive and up-grade essential public services after more than a decade of Tory (and LibDem-instigated) austerity, there was nothing offered in today’s Budget to remove the burden of toxic debt from Croydon or other cash-strapped councils.
And we’re far from alone. A record number of councils received “Exceptional Finance Support” from the Government this year to be able to balance the books. According to the Local Government Association, 1-in-4 councils in England will need EFS in the next two years. That is not sustainable, and the Treasury, and the Chancellor, need to do something to remove that debt burden and re-set the dial on local government finance.
But there was no mention of any of this in Reeves’ 80-minute Budget speech today.
Contradictions: Green Party AM Zack Polanski highlighted the absurdity of the Budget
Not everything is announced in the Budget speech itself. Reeves would still be talking at breakfast time tomorrow if it was. But everything is included in the painstakingly assembled Red Book from the Treasury.
And there we find: “The government will support local authority services through a real terms increase in core local government spending power of around real terms 3.2%, up £1.3billion, including at least £600million of new grant funding to support social care.”
But there could be a snag for the public, since the reference to “core spend” could still allow for bigger Council Tax increases – that way, Reeves can say that she hasn’t increased taxes on working people… she’s just outsourced the misery to town halls up and down the land.
Local government capital spend is up 10.7% in real terms over two years to April 2026, the Red Book says.
There’s also £1billion to help provision for SEND, Special Educational Needs and Disabled children. And there’s a welcome rebate for councils paying VAT on private school fees for SEND pupils.
Among other measures contained in the Red Book there was £1billion “to extend the Household Support Fund and Discretionary Housing Payments in 2025-2026, which will be used by local authorities to address immediate hardship and crisis”
Devil in the details: the Red Book for today’s Budget
Then there’s £1.4billion to rebuild the schools that had been neglected over the last 14 years, and almost £1.6billion for local roads maintenance.
There’s £233million of additional spending in 2025-2026 to prevent homelessness, intended to reduce the increase in the number of families in temporary accommodation and help to prevent rough sleeping.
And the government is making £500million available for 5,000 new “affordable” homes (not social housing, then).
In addition, local authorities are expected to receive around £1.1billion of new funding in 2025-2026 through the implementation of the Extended Producer Responsibility scheme to improve recycling. Croydon has plenty of scope for improving its recycling rates, as about 60% of this borough’s waste currently fuels the Beddington incinerator.
The Red Book also says: “The government will set out plans for fundamental reform of the children’s social care market… including promoting early intervention to help children stay with their families where possible and fixing the broken care market.”
Plus, there’s £46million to boost capacity and capability in local planning departments, “to support recruitment and training of 300 graduates and apprentices into local planning authorities, accelerate large sites that are stuck in the system and boost and upskill local plans”.
Among the multitude of commenters and experts offering their hot takes on the speech, as soon as Reeves had resumed her seat on Labour’s front bench, Robert Peston, ITV’s political editor, was the first to confirm that Labour’s first Budget in 14 years contained £40billion in tax increases. “This is a record for modern times, more than Lamont’s tax rises in 1992,” Peston noted.
He also relayed the findings of the OBR – the Office for Budget Responsibility – which said that the Budget will “leave GDP largely unchanged in five years”, after providing a brief, temporary boost. This, Peston suggested, would be “embarrassing” for Reeves and Keir Starmer, the Prime Minister.
In her speech, Reeves pre-emtively rejected the Tory groans. “This is a moment of fundamental choice for Britain. I have made my choices,” she said as she prepared to reveal the detail behind those “choices”.
Baron Barwell, the sometime MP for Croydon Central, cited the Manifesto promise-busting increase in National Insurance (for employers), and observed that “the Government has chosen to make it quite a bit more expensive to employ people in this country”.
Anne Ashworth, the former personal finance guru at The Times, highlighted how stamp duty on second homes is set to rise to 5%. “This could further reduce the supply on rental homes, putting further upward pressure on rents and squeezing the low paid,” Ashworth warned.
Redistribution: HM Treasury appears to suggest that the Budget is sharing the tax burden to those who can better afford it
There may have been some good news, though not much. Like the 1p a pint reduction in beer levy. Like brewers or pubs will be passing that reduction on to punters… “I’m going to have 10 pints of ale in a pub every day for a year to save £36,” one wag said. “I will, however, have to spend £18,250 on the beer at £5 a pint to save that £36!”
Marina Ahmad, one of Labour’s rising stars at City Hall, where the Assembly Member is her party’s spokesperson for the capital’s economy, described the Budget as a “much-needed shift towards investing in public services”.
She said, “I am pleased to see London benefit from the end of politicking with transport funding.
“London cannot be the engine of the UK’s economy without proper investment in our transport network. I welcome the extension of HS2 to Euston and the £485million for TfL’s capital renewals programme in 2025-2026.”
Retail politics: Andrew Fisher thinks people won’t forget the cut of winter fuel payments, bus fare increases and cuts to benefits
The Budget, Ahmad said, “puts us on the path to a fairer, stronger London”.
And Inside Croydon columnist, Andrew Fisher, given the day off to go and work for the i newspaper, declared the Labour Budget “a mixed bag”.
“Labour had hamstrung itself with commitments not to raise income tax or National Insurance for working people, and not to increase VAT or corporation tax… Reeves eschewed significant rises in capital gains tax or inheritance tax, and so the burden fell massively on employers’ National Insurance – adding £25billion to the cost of employing staff.”
Fisher, who wrote our open letter to Reeves last week, reckons “the retail politics are bad”.
In his i column he wrote: “Millions of pensioners will remember the winter fuel payment cut every time they turn the heating on this winter. Millions of workers will be reminded of the 50% fare increase every time they get a bus. And hundreds of thousands of disabled people – many of whom already live in poverty – will feel it every time they have to make the ‘tough choices’ that politicians on £90,000 a year never will.”
Read more: Dear Rachel: Croydon’s a microcosm for much of what is wrong
Read more: Oxford professor explains Budget in Andrew Fisher Interview
Read more: Dear Angela: It’s time for you to act and fund Croydon fairly
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