Policy paper

MHCLG main estimates memorandum 2024 to 2025

Published 17 July 2024

1. Overview

This memorandum for 2024 to 2025 provides the Housing, Communities and Local Government Select Committee with details of the strategic overview and objectives of the Ministry of Housing, Communities and Local Government (MHCLG) along with a summary of the key budgets that will enable the Department to meet these objectives.

The Main Estimate, and accompanying Explanatory Memorandum, were prepared before and during the general election campaign. As such, the Main Estimate and departmental priority outcomes were set in the previous Parliament, when the department was referred to as the Department for Levelling Up, Housing and Communities (DLUHC) and so the name used in this document. Since the Main Estimate and accompanying Explanatory Memorandum were prepared, the department has been renamed as the Ministry of Housing, Communities and Local Government, with the Statutory Instrument to formally change the name expected later in the year.

1.1 Objectives

DLUHC’s priority outcomes are as follows:

1. Level up the United Kingdom.
2. Regenerate places, ensuring everyone has access to a high quality, secure and affordable home, and a greater say in how they are planned and built.
3. Ensure that buildings are safe and system interventions are effective and proportionate.
4. Strengthen the Union to ensure that its benefits, and the impact of levelling up across all parts of the UK, are clear and visible to all citizens.
5. A strong and sustainable local government sector with resilient, connected and integrated communities.

The budgets held by the Department and the expenditure that is undertaken support these objectives. Details of the spending that relates to each objective are given in Section 3.

1.2 Spending controls

DLUHC’s spending is broken down into several different spending totals, for which Parliament’s approval is sought.

The spending totals on which Parliament votes are:

• Resource Departmental Expenditure Limit (Resource DEL or RDEL) – this budget covers current expenditure and comprises two distinct types of budgets:
  • Programme budgets which fund the current expenditure of delivering programmes (e.g. the legal costs associated with capital grant programmes); and
  • Administration budgets which fund the costs of running the Department (and its arm’s-length bodies) including accommodation and pay.

DLUHC is unusual among government departments in that it has two Resource DEL budgets. These are to cover the Department’s core function (the ‘Communities’ budget) and those which are exclusively delivered through local authorities (the ‘Local Government’ budget).

• Capital Departmental Expenditure Limit (Capital DEL or CDEL) – this budget covers expenditure on assets, investment and capital grants and comprises two distinct types of budgets:
  • Capital grant budgets which fund capital costs of delivering programmes; and
  • Financial transaction (FT) budgets which fund programmes that provide financial instruments such as loans or purchase of equity.
• Resource Annually Managed Expenditure (Resource AME or RAME) – this budget covers current expenditure that is inherently volatile or demand-led meaning that Departments do not always have the ability to manage spending, for example, impairments, provisions and pension scheme movements.

In addition, Parliament votes on a net cash requirement, designed to cover the elements of the above budgets which require DLUHC to pay out cash in year.

1.3 Main areas of spending

The graphics below show the main components of DLUHC’s proposed budget for 2024 to 2025. They also show the proportions of funds spent on its main activities.

1. Communities Resource DEL (Programme and Administration): Total budget £3.6 billion

2. Local Government Resource DEL: Total budget £11.3 billion

The vast majority of the Local Government DEL Resource budget of £11.3 billion is spent on current grants and payments to Local Government.

3. Capital DEL (Grants and Financial Transactions): Total budget £7.2 billion

4. Resource Annually Managed Expenditure (AME): Total budget £24.2 billion

The vast majority (~95%) of the Resource AME budget is held for Business Rate transactions, with remainder supporting the Department’s portfolio of housing investments and guarantees including Help to Buy and the Affordable Homes Programme.

1.4 Comparison of spending totals sought

The table below shows how the totals sought for DLUHC at Main Estimate 2024 to 2025 compared with Supplementary Estimate 2023 to 2024 and Main Estimate 2023 to 2024 budgets.

Table 1

Spending Total Amounts sought this year for (Main Estimate 2024-25)		Change from final budget last year (Supplementary Estimate 2023-24)		Change from original budget last year (Main Estimate 2023-24)
Spending Type	£million	£million	%	£million	%
Resource DEL - Communities	3,569	99	2.8%	530	17%
Resource DEL - Local Government	11,337	(3,264)	(22%)	(3,287)	(22%)
Capital DEL – Communities	7,158	34	0%	(36)	1%
Resource AME – Total DLUHC	24,224	6,578	37%	4,349	22%

1.5 Key drivers of spending changes since last year

Communities Resource DEL

The Department’s Resource DEL budget at Main Estimate 2024 to 2025 is £3,569 million, with spending plans being £99m (2.8%) higher than the final budget sought at Supplementary Estimate 2023 to 2024.

The overall £99 million increase against the final spending plans in 2023 to 2024 is predominantly due to a substantial increase of £667.5 million on the UK Shared Prosperity Fund, reflecting the annual increase in funding that was set in the 2021 Spending Review. There has also been an increase in Election budgets of £95.5 million linked to the Police and Crime Commissioner elections taking place in 2024 to 2025.

These increases are offset by lower budgets being requested at Main Estimates for Home Building Funds and the Land and Infrastructure fund (-£261.0 million in total), with DLUHC intending to make reserve claims for these at Supplementary Estimate 2024 to 2025. A further £148 million has not been included in our Main Estimate budget figures, which we are expecting to be transferred into the department at Supplementary Estimates. There has also been a further £230 million reduction on the Supporting Families budget, for which policy responsibility, and the associated budget, has now been transferred to the Department for Education. Explanations are set out in Section 2.

A portion of our Resource DEL budget relates to the Department’s administration budget. Of the overall budget, the administration budget amounts to £333 million, a decrease of £5 million since Supplementary Estimate 2023-24. More details on this year’s spend and how it compares to previous years can be found below in Section 1.8.

Local Government Resource DEL

The Local Government Resource DEL budget at Main Estimate 2024 to 2025 is £11,337 million with spending plans being £3,264 lower than the final budget at Supplementary Estimate 2023 to 2024.

The overall variance against the final spending plans in 2023 to 2024 is largely due to the reclassification of section 31 business rate relief grants which are paid to local authorities (worth £4,997 million in 2023 to 2024) from DEL to Annually Managed Expenditure (AME). This follows a Treasury led review that concluded that linked to the nature of the business rate reliefs being compensated, which are difficult to forecast and to a large extent control, these grant payments should be classified in AME in future. The change brings this expenditure into line with other business rate related transactions which are also classified in AME. The change takes effect from 1st April 2024.

The reduction in DEL from the reclassification is offset by increases of £1,880 million for Social Care grants, £213 million for Revenue Support Grant and £135m for Funding Guarantee less reductions of £396 million for Services Grant and £100m for Council Tax Support Fund.

Capital DEL

The Department’s capital budgets of £7,158 million can be split into two areas: ‘Capital Grant’ and ‘Capital Financial Transactions’ where we have Main Estimate budgets of £6,596 million and £562 million respectively.

The Department’s overall spending plans for Capital DEL, as set out in the budget requested at Main Estimate 2024-25, is £34 million (<0.5%) higher than the budget at Supplementary Estimate 2023 to 2024.

Capital Grant – The Department’s capital grant budget is £437.8 million lower at Main Estimate 2024 to 2025 compared with the Supplementary Estimate 2023 to 2024. The overall decrease is predominantly driven by a £508 million lower budget being requested for the Levelling Up Fund, which will be funded via a Reserve Claim at the Supplementary Estimate, and a reduction of £152 million on the Future High Streets Fund. A further £249 million has not been included in our Main Estimate budget figures, which we are expecting to be transferred into the department at Supplementary Estimate. These are offset by increased budgets for Levelling Up Partnerships (£170 million), UKSPF (£156 million), New Devolution Deals (£96 million) and the Single Homelessness Accommodation Programme (£51 million). Explanations are set out in Section 2.

Capital Financial Transactions – The Main Estimate budget for 2024 to 2025 is £471 million higher than the Supplementary Estimate in 2023 to 2024. This has mainly been driven by increases to Land and Infrastructure and Long Term Funds which cover a wide range of housing and planning projects and therefore are not consistent budgets from one year to the next. There is also an increase to the department’s unallocated provision to allow us to prioritise in response to market conditions. Explanations are set out in Section 2.

Resource AME

The Resource AME budget for 2024 to 2025 has increased by £6,599 million from the Supplementary Estimate 2023 to 2024.

LG AME has increased by £7 billion overall. Most of this increase relates to the reclassification of section 31 business rate relief grants from DEL to Annually Managed Expenditure (AME) worth £5,550 million in 2024 to 2025 as set out in the Local Government Resource DEL section. The Supplementary Estimate position also included receipt income of £1,342 million for business rate relief outturns which relate to the reconciliation of the business rates retention system for prior financial years and reduced the spending control total accordingly for 2023 to 2024. Without this income in 2024 to 2025, the Main Estimate position increases by £1,342 million. There is also an increase of £1,513m for the local share of business rates and a reduction of £1,448 million for other business rates transactions including £1,111 million for Transitional Protection Payments. Other large movements include a £0.4 billion decrease in Help to Buy. Explanations are set out in Section 2.

1.6 New policies and programmes; ambit changes

The ambit is a description of the services or purposes to which expenditure and income are to be put in respect of each of the relevant budget control totals. There have been no substantive changes to the department’s ambit for 2024 to 2025, other than the removal of specific references to providing support to local authorities and communities in respect of Covid-19 response and recovery, and cyber and digital modernisation.

A new Arm’s Length Body, the Office for Place, was announced at the end of July 2023. The Office for Place existed, but operated in shadow form from the department to deliver its programme, funded by DLUHC core budget. On 1 April 2024 the company became fully established and “active” and is now receiving grant in aid funding from DLUHC. The Office for Place has been set up to support in the creation and stewardship of more beautiful, sustainable, popular and healthy places.

1.7 Spending trends

The chart below shows overall spending trends for the last 4 years, alongside plans presented in the 2024 to 2025 Main Estimate.

Communities RDEL

Overall, spending on Communities RDEL has been relatively stable in past years and the settlement at Spending Round 2021 follows the same broad trend. Spending in 2022 to 2023 was temporarily above trend due to the creation of the Homes for Ukraine programme.

Capital DEL

The Department has spent over £5 billion on its CDEL programmes each year since 2015 to 2016 – peaking at £9 billion in 2020 to 2021 due to a spike in demand for the legacy Help to Buy scheme. Spending decreased in 2021 to 2022 as Covid-19 impacted on delivery of large capital programmes but has been at a higher level since.

Local Government RDEL

Part of the Department’s remit is to manage and provide funding to local government for services on behalf of central government. Spending on Local Government DEL and almost all of the Department’s Annually Managed Expenditure (AME) is for Local Government.

The LG DEL settlement for 2024 to 2025 at Spending Round 2021 provides for an increase of £3.7 billion against baseline for core funding to help meet funding pressures in Adult Social Care and other services. An additional £1 billion was announced at Autumn Statement 2022 and £0.5 billion at the Local Government Finance Settlement in February 2024.

Resource AME

The Department’s AME budget for 2023 to 2024 has increased by £6.6 billion from the Supplementary Estimate 2023 to 2024.

LG AME has increased by £7 billion overall. Most of this increase relates to the reclassification of section 31 business rate relief grants from DEL to Annually Managed Expenditure (AME) worth £5,550 million as set out in the Local Government Resource DEL section. The Supplementary Estimate position also included receipt income of £1,342 million for business rate relief outturns which relate to the reconciliation of the business rates retention system for prior years and reduced the spending control total accordingly for 2023 to 2024. Without this income in 2024 to 2025, the Main Estimate position increases by £1,342 million. There is also an increase of £1,513 million for the local share of business rates and a reduction of £1,448 million for other business rates transactions including £1,111 million for Transitional Protection Payments. Other large movements include a £0.4 billion decrease in Help to Buy.

1.8 Administration costs

Table 2

Spending total amounts sought this year Main Estimate 2024-25		Change from final budget last year Supplementary Estimate 2023-24		Change from original budget last year Main Estimate 2023-24
Administration costs	£million	£million	%	£million	%
Administration non ringfenced	£297.1m	(4.4)	(1%)	1.7	1%
Administration ringfenced (depreciation)	£36.5m	0.1	0%	(4.8)	(12%)
Total	£333.6m	(5.2)	(2%)	(3.9)	(1%)

Through the Spending Review 2021, the Department was allocated a non-ringfenced admin budget for 2024 to 2025 of £305 million. A net £16 million has been transferred to ringfenced admin in respect of the implementation of International Financial Reporting Standard (IFRS) 16 - Leases.

Further changes have since been made to the Department’s administration budget at the Main Estimate 2024 to 2025, including an additional £5 million to cover the Department’s Elections, Union and Constitution functions, £1 million of additional funding for the UK Governance team function that transferred from Cabinet Office in 2023 to 2024, and a further £1 million of funding in relation to Levelling Up announcements made at Autumn Statement 2023.

1.9 Funding: Spending Review and Budgets

Spending Review 2021 set the overall budget for resource and capital expenditure for 2024 to 2025.

Total Communities DEL budget of £10.4 billion was made available via Spending Review 2021, of which £3.4 billion was Resource DEL and £7 billion Capital DEL. Following announcements at Autumn Statement 2023, an additional £0.1 billion of Resource DEL and £0.1 billion of CDEL was also made available in 2024 to 2025.

At Main Estimates we had an additional material transfer of funding from Local Government DEL to Communities DEL of £0.3 billion for the New Homes Bonus, and a transfer of £0.1 billion to the Department for Education for the UK Shared Prosperity Fund.

Total Local Government DEL budget of £12.8 billion was made available at Spending Review 2021, all of which was Resource DEL. Autumn Statement 2022 announced additional funding of £1 billion for Social Care and £0.5 billion at the Local Government Finance Settlement in February 2024. £1.5 billion was also provided at AS22 and £1.7 billion at AS23 for the forecast increased take up of BR Relief measures.

At Main Estimates, reductions are being made for the reclassification of section 31 Business Rates Relief grants to AME (worth £5 billion in DEL before the reclassification), £1bn will be surrendered to the Treasury in return for increased business rates retention for certain local authority areas, £0.3 billion is being transferred to Communities DEL for New Homes Bonus and £0.1 billion transferring to DfE for Supporting families. In addition, there are increases of £0.1 billion from the Home Office for the transfer of Fire Pensions into the Local Government Settlement and £0.2 billion from the Department for Health and Social Care for the Market Sustainability and Improvement Fund.

1.10 Funding: other spending announcements

A number of announcements were made at Autumn Statement 2023 and Spring Budget 2024 relating to housing, levelling up and devolution. These activities are being funded in 2024-25 from a combination of new funding and through the department absorbing elements within existing budgets across Estimate Row subheads

A – Local Government & Public Services,
B – Housing & Planning,
C – Local Government & Devolution, and
D – Elections, Constitution & Union

2. Spending detail

2.1 Explanations of changes in spending

In the following tables, differences of more than 10% and £10 million or more than 5% and £200 million are explained in a note beneath the relevant table.

Resource DEL - Communities

The table below shows how DLUHC’s spending plans for Resource DEL (Programme and Administration) in the Communities Budget compare with the 2023 to 2024 Supplementary Estimate. Our administration budgets appear on several estimate rows. This is primarily because administration spending in our arm’s-length bodies (ALBs) appears on different estimate rows to spend in the core Department.

Table 3

Communities Resource DEL
	2024-25 Main Estimate budget sought	2023-24 Supplementary Estimate budget approved	Change from Supplementary Estimate 2023-24
Sub-head	£million	£million	£million	%	See note
Local Government & Public Services	93.6	220.0	(126.4)	(57%)	1
Housing & Planning	1,570.1	1,914.9	(344.8)	(18%)	2
Local Growth & Devolution	1,463.7	748.7	715.0	95%	3
Elections, Union and Constitution	45.1	39.8	5.3	13%
Supporting Families	0	230.4	(230.4)	(100%)	4
Research, Data & Trading Funds	5.6	15.4	(9.8)	(64%)
DLUHC Staff, Building and Infrastructure Costs	275.4	293.2	(17.8)	(6%)
Departmental Unallocated Provision	12.0	0.0	12.0	100%	5
Elections	103.2	7.7	95.5	1240%	6
Total RDEL DLUHC Communities	3,568.7	3,470.1	98.6	3%

Notes

1. Local Government & Public Services (-£126.4 million): Variance largely driven by increases to the Rough Sleeping Drug and Alcohol Grant budget (£59.5 million) this year, which was transferred to DHSC at Supps 2023 to 2024, and the Single Homelessness Accommodation programme (£15.6 million) which will see the bulk of its delivery in 2024 to 2025. These increases are offset by reductions in Homes for Ukraine (£35.9 million), where further budget is to be provided through a Reserve Claim at the Supplementary Estimate, and Flooding (£10.0 million) and Hong Kong resettlements (£12.6 million) which will similarly have budgets allocated via reserve claims at Supps, should they be required. A further £148 million has not been included in our Main Estimate budget figures, which we are expecting to be transferred into the department at Supplementary Estimates instead.

2. Housing & Planning (-£344.8 million): Variance largely driven by reductions to Homes England’s Home Building Funds and Land and Infrastructure fund (-£261.0 million in total), as Main Estimate budgets do not include cover for Expected Credit Losses, which will be requested at Supplementary Estimates as usual; Rough Sleeping Initiative (-£32.2 million) as the 2023 to 2024 Supps budget had also included an additional circa £30 million of top-up funding for emerging pressures; and Single Land Programme (-£31.6 million) due to an increase in the amount of income that can be retained in 2024 to 2025.

3. Local Growth & Devolution (£715.0 million): Variance principally driven by a £667.5 million increase to the UK Shared Prosperity Fund in line with delivery plans. In addition, there have also been increases of £39.4 million for New Devolution Deals, linked to investment funds agreed as part of the devolution deals over 2022-23 and 2023-24, but which only start to pay out after Mayoral elections have taken place, and new MCAs are established.

4. Supporting Families (-£230.4 million): Responsibility and budget for delivering the Supporting Families programme moved to the Department for Education as of 1 April 2024. Therefore there is no budget required within DLUHC, with the 2024 to 2025 budget being transferred (see section 2.2 for further detail of this transfer).

5. Departmental Unallocated Provision (£12 million): Variance is due to the provision being removed at Supplementary Estimates each year.

6. Elections (£95.5 million): Variance driven by additional funding to cover the Police and Crime Commissioner elections in 2024 to 2025. General Election funding will be requested at Supplementary Estimates. This is non-voted expenditure.

Resource DEL – Local Government

The table below shows how DLUHC’s spending plans for Resource DEL in the Local Government Budget compare with the 2023-24 Supplementary Estimate.

Note: Local Government Resource DEL is not mapped to Departmental Strategic objectives.

Table 4

Local Government Resource DEL
	2024-25 Main Estimate budget sought	2023-24 Supplementary Estimate budget approved	Change from Supplementary Estimate 2023-24
Sub-head	£million	£million	£million	%	See note
Revenue Support Grants	2,118.0	1,905.4	212.5	11%	1
Other Grants and Payments	9,206.1	12,649.7	(3,443.6)	(27%)	2
Business Rates Retention	13.2	46.4	(33.2)	(92%)	3
Total Local Government RDEL	11,337.3	14,601.5	(3,264.2)	(22%)

1. Revenue Support Grants: Increases in 2024 to 2025 due to (CPI 6.6% in September 2023) and the rolling in of Fire Pensions Grant from the Homes Office.

2. Other Grants and Payments: This reduction is largely due to the reclassification of section 31 BR Reliefs (worth £4.9 billion in 2023 to 2024). Other, offsetting increases include £1,880 million for Social Care grants and £135m for Funding Guarantee. There are also other reductions such as £396 million for Services Grant and £100 million for Council Tax Support Fund.

3. Business Rates Retention: Most of the reduction reflects that there is no start year budget for Safety Net on account payments at the Main Estimate. Treasury have confirmed they will provide £61 million for this spending at the Supplementary Estimate which would more than offset the reduction.

Capital DEL- Communities

The table below shows how DLUHC’s spending plans for Capital DEL in the Communities Budget compared with the 2023 to 2024 Supplementary Estimate.

Table 5

Capital Del Grant – Communities
	2024-25 Main Estimate budget sought	2023-24 Supplementary Estimate budget approved	Change from Supplementary Estimate 2023-24
Sub-head	£million	£million	£million	%	See note
Local Government & Public Services	119.7	68.7	51.0	74%	1
Housing & Planning	4,620.2	4,862.0	(241.8)	(5%)	2
Local Growth & Devolution	1,782.0	2,036.5	(254.5)	(12%)	3
Elections, Union and Constitution	7.5	11.6	(4.1)	(35%)
Supporting Families	0	0.7	(0.7)	(100%)
Research, Data & Trading Funds	11.9	10.2	1.7	17%
DLUHC Staff, Building and Infrastructure Costs	54.9	44.2	10.7	24%	4
Total CDEL Grant DLUHC	6,596.2	7,033.8	(437.6)	(6%)

CDEL Grant

1. Local Government & Public Services (£50.9 million): Variance is due to the Single Homelessness Accommodation programme, for which allocations following the final round of bidding for the programme were announced in February 2024, with the bulk of delivery programmed in 2024 to 2025.

2. Housing & Planning (-£241.8 million): Variance has been driven by £249 million which has not been included in our Main Estimate budget figures, which we are expecting to be transferred into the department at Supplementary Estimates.

3. Local Growth & Devolution (-£254.4 million): Variance is driven by decreases on the Levelling Up Fund (-£508.1 million), Freeports (-£27.2 million) and the Community Ownership Fund (£21.3 million), all of which will be funded via a reserve claim at Supplementary Estimates. The Future High Streets Fund is due to end by September 2024 and accounts for £152.1 million of the variance. These reductions are offset by increases to Levelling Up Partnerships (£170.1 million), which were established in 2023 to 2024 but the bulk of delivery will be in 2024 to 2025; UK Shared Prosperity Fund (£155.9 million) which will see funding and delivery increase in its third year; New Devolution Deals (£96.4 million) partly for investment funds of devolution deals agreed in 2023 to 2024 where funding starts after new MCAs are set up, and partly for new devolution deals anticipated in 2024 to 2025; and Investment Zones (£52 million) which is a new programme for 2024 to 2025.

4. DLUHC Staff, Building and Infrastructure Costs (£10.7 million): Increase predominantly linked to the capitalised lease costs under IFRS16 resulting from planned additions to our estate and other refurbishment, and increased investment in Digital services.

Table 6

Capital Del Financial Transactions – Communities
	2024-25 Main Estimate budget sought	2023-24 Supplementary Estimate budget approved	Change from Supplementary Estimate 2023-24
Sub-head	£million	£million	£million	%	See note
Local Government & Public Services	-	(50.0)	50.0	(100%)	1
Housing & Planning	331.0	145.8	185.3	127%	2
Local Growth & Devolution	-	(5.5)	5.5	(100%)
Departmental Unallocated Provision	230.7	-	230.7	100%	3
Total CDEL FT DLUHC	561.7	90.3	471.4	522%

CDEL FT

1. Local Government & Public Services (£50.0 million): Variance is due to the London Settlement income budget following a loan repayment that had been included in 2023 to 2024 in error. The loan is actually expected to be repaid in 2025 to 2026 and therefore no budget is included for Mains 2024 to 2025.

2. Housing & Planning (£185.3 million): The overall increase is predominantly driven by Land and Infrastructure and Long Term Funds, which cover a wide variety of projects, including third party loans, and the acquisition and remediation of different parcels of land. As such, the budget requirement each year is not consistent.

3. Departmental Unallocated Provision (£230.7 million): The Department has allocated budgets for 2024 to 2025 Main Estimate based on the best available forecasts for the coming financial year, leaving a portion of our CDEL Financial Transactions budget available to prioritise in response to market conditions.

The table below shows how spending plans for Resource AME compare with 2023 to 2024 Supplementary Estimate. Note that Resource AME is not mapped to Outcome Delivery Plan objectives.

Table 7

Resource AME
	2024-25 Main Estimate budget sought	2023-24 Supplementary Estimate budget approved	Change from Supplementary Estimate 2023-24
Sub-head	£million	£million	£million	%	See note
Local Government & Public Services	52.2	59.4	(7.2)	(12%)
Housing & Planning	1,081.6	1,450.3	(368.7)	(25%)	1
Other Grants and Payments	5,550.3	0	5,550.3	100%	2
Non-Domestic Rates Outturn Adjustments	350.0	249.4	100.6	40%	3
Local Growth & Devolution	0.0	5.0	(5.0)	(100%)
DLUHC Staff, Building and Infrastructure Costs	(0.2)	(0.2)	0.0	(0%)
Business Rates Retention	17,189.7	15,882.5	1,307.2	8%	4
Total Resource Government AME	24,223.6	17,646.4	6,577.2	37%

1. Housing & Planning (£368.7 million): Variance principally driven by a £434 million decrease reflecting expectations of changes in the Help to Buy loan book value. This is partially offset by increases of

£37 million on the Land and Infrastructure Fund, and £22 million on the Single Land Programme. Homes England’s AME estimates are based on updated economic scenarios, using a “reasonable worst case” approach. The movement in budget from 2023-24 to 2024-25 reflects changes in these economic forecasts.

2. Other Grants and Payments: (£5,550 million): This increase relates to the reclassification of section 31 business rate relief grants from DEL to Annually Managed Expenditure (AME), worth £5,550 million in 2024 to 2025.

3. Non-Domestic Rates Outturn Adjustments (£100 million): The start year budget of £350 million will be adjusted at Supplementary Estimates following submission of local authority outturn data.

4. Business Rate Retention: (1,307.2 million) The Supplementary Estimate position included receipt income of £1,342 million for business rate relief outturns which related to the reconciliation of the business rates retention system for prior financial years and reduced the spending control total accordingly for 2023 to 2024. Without this income in 2024 to 2025, the Main Estimate position increases by £1,342 million. There is also an increase of £1,513 million for the local share of business rates and a reduction of £1,548 million for other business rates transactions including £1,111 million for Transitional Protection Payments.

2.2            Restructuring

On 23 May 2023, a Machinery of Government change was announced that transferred responsibility for the delivery of the Supporting Families programme from DLUHC to the Department for Education. This change took effect from 1 April 2024. The associated budgets have, therefore, also transferred across to DfE for 2024 to 2025.

This change has resulted in £166.6 million of RDEL budget (of which £1.6 million Admin) and £1.3 million of CDEL budget transferring from DLUHC Communities DEL, with £90.0 million of RDEL also being transferred from Local Government RDEL. In 2023 to 2024, these budgets came to a total of £230 million and had previously been held on Estimate subhead E, which had been a unique row for the Supporting Families programme. With this programme being transferred in its entirety, subhead E has since been reallocated.

2.3            Ring-fenced budgets

Within the totals, the following elements are ring-fenced. This means that savings in these budgets may not be used to fund pressures on other budgets.

Resource DEL

Table 8

Spending total amounts sought this year Main Estimate 2024-25		Change from final budget last year Supplementary Estimate 2023-24		Change from original budget last year Main Estimate 2023-24
		£m	%	£m	%
Depreciation Programme	8.4	-	-	-	-
Depreciation Administration	36.5	0.1	0%	(4.8)	(12%)
UKSPF	1,135.7	667.4	143%	642.8	130%

Capital DEL

Table 9

Spending total amounts sought this year Main Estimate 2024-25		Change from final budget last year Supplementary Estimate 2023-24		Change from original budget last year Main Estimate 2023-24
		£m	%	£m	%
Financial Transactions	561.7	471.4	522%	(178.6)	(24%)
UKSPF	303.7	155.9	105%	241.0	100%

2.4 Changes to contingent liabilities

At Main Estimate, the following changes have been made to contingent liabilities held by the Department:

• The department operates two guarantee schemes for the affordable housing sector (AHGS). The AHGS 2013 closed to applicants in March 2016 and the programme is now in the portfolio management and monitoring phase, meaning there will be no new applicants or approvals. Therefore, there will be no further drawing against this scheme, with £3.2 billion drawn down. A financial guarantee against the 2013 scheme has been recognised in the Statement of Financial Position with a value of £28.3 million. A second scheme was launched in 2020, guaranteeing debt of no more than £3 billion. Autumn Statement 2023 announced a £3 billion expansion to the scheme making guaranteed debt up to a total of £6 billion available, with applications from borrowers for the expanded scheme opening in February 2024. As of March 2024, £1.3 billion of borrowing had been approved, with £1.1 billion drawn down. The financial guarantee in the Statement of Financial Position has increased to a value of £1.36 million.

• The department has provided a guarantee scheme for the private rented sector (PRS), guaranteeing debt of no more than £3.5 billion. As of March 2024, the department had approved borrowing of circa £1.8bn of which £1.5 billion has been drawn down and is covered by the guarantee scheme. The guarantees have been valued in accordance with IFRS 9 and are recognised as a financial guarantee in the Statement of Financial Position. The value has reduced from £27.3 million.

• In May 2019, the department launched the ENABLE Build guarantee scheme, guaranteeing debt of no more than £1 billion. As at March 2024, £420.5 million has been drawn down and is covered by the guarantee scheme. The guarantees have been valued in accordance with IFRS 9 and have been recognised as a financial guarantee in the Statement of Financial Position. The value has increased to £279,207.

• Planning Inspectorate: Litigation costs may be incurred following unsuccessful attempts to resist a High Court challenge to an Inspector’s decision. The timing and value of such awards are difficult to predict, but have been increased from £64,000 to £124,000.

• Planning Inspectorate: Ex-gratia payments which may possibly be made to appellants or other appeal parties who have incurred abortive appeal costs following an error made by a member of the Inspectorate’s staff. The value has been reduced from £243,000 to £163,000.

3. Priorities and performance

3.1 How spending relates to objectives

The table below shows how expenditure against subhead descriptions contributes to Departmental priorities under the Outcome Delivery Plan.

Table 10

Estimate subhead	Level up the United Kingdom	Regenerate places, ensuring everyone has access to a high quality, secure and affordable home, and a greater say in how they are planned and built	Ensure that buildings are safe and system interventions are effective and proportionate	A strong and sustainable local government sector with resilient, connected and integrated communities	Strengthen the Union to ensure that its benefits, and the impact of levelling up across all part of the UK, are clear and visible to all citizens	Other – Administration, Local Government Resource DEL and Resource	Total
All figures £m
A Local Government & Public Services	5.5	11.9	20.7	265.1	-	-	303.2
B Housing & Planning	-	1,950.3	757.0	516.9	-	-	3,224.2
C Local Growth & Devolution	3,050.9	194.7	-	-	-	-	3,245.6
D Elections, Union and Constitution	-	-	-	51.7	0.9	-	52.6
E Research, Data & Trading Funds	-	-	-	-	-	17.4	17.4
F DLUHC Staff, Building and Infrastructure Costs	-	-	-	-	-	330.5	330.5
G Departmental Unallocated Provision	-	-	-	-	-	242.7	242.7
H Local Government & Public Services (ALB)(Net)	-	-	-	-	-	18.8	18.8
I Housing & Planning (ALB)(Net)	-	3,002.8	139.6	-	-	45.8	3,188.2
J Elections	-	-	-	103.2	-	-	103.2
K Revenue Support Grant	-	-	-	-	-	2,118.0	2,118.0
L Other Grants and Payments	-	-	-	-	-	9,206.1	9,206.1
M Business Rates Retention	-	-	-	-	-	13.3	13.3
N Local Government & Public Services	-	-	-	-	-	51.5	51.1
O Housing & Planning	-	-	-	-	-	97.1	97.1
P DLUHC Staff, Building and Infrastructure Costs	-	-	-	-	-	(0.2)	(0.2)
Q Other Grants and Payments						5,550.3	5,550.3
R Non-Domestic Rates Outturn Adjustments	-	-	-	-	-	350.0	350.0
S Local Government & Public Services (ALB)(Net)	-	-	-	-	-	0.8	0.8
T Housing & Planning (ALB)(Net)	-	-	-	-	-	984.4	984.4
U Business Rates Retention	-	-	-	-	-	17,189.7	17,189.7
Total	3,056.4	5,159.7	917.3	936.9	0.9	36,216.2	46,287.4

Local Government Resource DEL, Communities Resource DEL Administration and Resource AME budgets are not allocated to Departmental Objectives.

As noted in Section 2.2, subhead E had previously been used exclusively for the Supporting Families programme. Since that programme has been moved over to DfE via a Machinery of Government transfer, subhead E has now been reallocated in 2024 to 2025, as shown above.

3.2 Measures of performance against each priority

The priority outcomes for the Department are:

1. Level up the United Kingdom.
2. Regenerate places, ensuring everyone has access to a high quality, secure and affordable home, and a greater say in how they are planned and built.
3. Ensure that buildings are safe and system interventions are effective and proportionate.
4. A strong and sustainable local government sector with resilient, connected and integrated communities.
5. Strengthen the Union to ensure that its benefits, and the impact of levelling up across all parts of the UK, are clear and visible to all citizens.

The priority outcomes listed above reflect the remit of the Department. Progress is reported and monitored through Portfolio Boards on a monthly basis with a quarterly stocktake undertaken by the Executive Team. The Department also reports against the agreed Priority Outcomes in the Annual Report and Accounts each year.

3.3 Major projects

In 2023/24, DLUHC held 11 of the major projects and programmes included in the Government Major Projects Portfolio (GMPP). They benefit from Infrastructure and Projects Authority (IPA) support, assurance, and are subject to quarterly reporting. An overview of the Department’s GMPP programmes are as follows:

• Remediation Portfolio: The Remediation Portfolio’s overarching strategic objective is to bring all affected buildings over 11 metres with unsafe cladding up to the minimum life-safety standard quickly, completely, proportionately, and consistently, while ensuring that residents are considered throughout the remediation process, delivering value for money and pursuing those responsible for the cost of remediation.

The remediation of circa 11,000 buildings is a programme of works with a central cost estimate of circa £18 billion (including circa £9.2 billion for government-led remediation) delivered through five programmes; the Aluminium Composite Material (ACM) programme, the Building Safety Fund (BSF) programme, the Cladding Safety Scheme (CSS) which is delivered through Homes England, the Responsible Actors Scheme (RAS), and the Social Housing (SH) programme.

• Affordable Homes Programme (AHP): The AHP allocates grant funding to Local Authorities and Housing Associations to help support the capital costs of developing affordable housing for rent or sale. The 2021 to 2026 AHP operates with a budget of £11.5 billion. Over 2023 delivery targets were renegotiated to reflect economic challenges. Delivery of the programme is delegated to our delivery partners Homes England and the Greater London Authority. Delivery partners have full delegated responsibility to make spending and allocation decisions in line with their targets, agreed assessment criteria, and within predetermined delegation limits.

• Digital Planning Programme: The Digital Planning Programme is moving a semi analogue planning system, based on documents, to one that is data-driven, standards based, and provides user centred products and services. A shift to data from documents will underpin a more efficient and responsive planning ecosystem, capable of identifying more land for development and of deciding what to build and where, as well as enduring a faster and more efficient decision-making process.

• Electoral Integrity Programme: The Electoral Integrity Programme has implemented the Elections Act 2022. The Act brought in key recommendations from the Pickles report, including voter identification, removal of the 15-year limit on overseas electors’ UK Parliamentary Election voting rights, some recommendations from the Law Commission, and other measures. As of May 2024, all measures have come into effect, meaning the EIP is approaching its closure phase. There is some remaining work to do, such as continuing to make updates and improvements to digital services and to fund implementation of new measures, but we will fold this into business-as-usual. We have two contracts in place to evaluate the Elections Act, with the second report evaluating delivery at the 2024 polls expected for March 2025.

• Freeports: Freeports aim to help places transition into sectors that will sustain in the long term, attracting investment, enabling innovation, and creating high-quality jobs. They offer benefits for businesses, including tax reliefs on specific sites and dedicated support for innovation and international trade. There are 8 Freeport locations in England: Teesside, Humber, East Midlands, Freeport East, Liverpool, Thames, Solent and Plymouth and South Devon. Two Green Freeports have also been launched in Scotland (Inverness & Cromarty Firth and Forth Green Freeport) and two Freeports in Wales (Celtic and Anglesey Freeport). Discussions continued with stakeholders in Northern Ireland.

• Grenfell Site and Programme: The government took ownership of the Grenfell Tower site in July 2019 and established the Grenfell Site & Programme to deliver the vision of the community-led Grenfell Tower Memorial Commission for a fitting memorial for the bereaved, survivors and Grenfell community, recognising the Grenfell Tower fire tragedy and honouring those who lost their lives. Specifically, the programme objectives are to:
  • Manage the site safely and protect the health and safety of those living, studying and working in close proximity to the site;
  • Engage empathetically with the bereaved, survivors and community at every step; seek progress on policy issues they care about; work with public authorities to assist their recovery; and support the GTMC to realise their vision to deliver a fitting memorial.
  • Realise the vision of the community-led Grenfell Tower Memorial Commission, by delivering a fitting memorial for the bereaved, survivors and local community, and make an evidence-based decision on the tower, in line with legal responsibilities as the owner and a public authority;
  • Ensure our approach is trauma aware, and that we work with partners on the delivery of suitable and accessible physical and mental health services to support the community and the DLUHC programme teams and;
  • Deliver the vision through rigorous programme management techniques.

• Housing Infrastructure Fund (HIF): This programme provides investment in up-front infrastructure to unlock housing delivery. HIF is providing £4.2bn of infrastructure grant funding to over 90 local authorities for physical infrastructure (such as roads, community facilities, utilities, land assembly), to unlock up to circa 270,000 homes. Following an IPA Gate review rated red in 2023, the programme did a reset of their business case to respond to the challenging economic conditions, and their delivery rating improved to amber at the IPA review last autumn.

• Levelling Up Fund (LUF): This fund was open to bids from all local authorities in the UK alongside some public sector and other bodies in Northern Ireland. The capital-only fund provides grant payments to successful bidders to support town centre & high street regeneration, transport and cultural & heritage bids / projects. Round 3 was announced on 20 November 2023, with 55 local projects awarded a share of circa £1 billion.

• Levelling Up Home Building Fund (LUHBF): The Levelling Up Home Building Fund is a £2 billion fund which is open to SME housebuilders, non-bank lenders and sector innovators. The Fund aims to deliver 42,000 new homes and unlock a further 9,300 homes.

• Towns Fund: This programme has two major components: Town Deals and the Future High Streets Fund (FHSF). The Town Deals programme aims to regenerate towns and deliver long- term economic and productivity growth through investments in urban regeneration, digital and physical connectivity, skills, heritage and enterprise infrastructure. The Future High Streets Fund aims to renew and reshape town centres and high streets to improve experience, drive growth and ensure future sustainability. The total funding for both programmes is £3.2 billion.

• UK Holocaust Memorial and Learning Centre (UKHMLC): This programme is to build a new memorial in Victoria Tower Gardens in Westminster to honour the six million Jewish men, women and children that were murdered during the Holocaust, as well as other victims of Nazi persecution. A learning centre integrated with the memorial will explore the British relationship to the Holocaust including the role of the British Parliament and democratic institutions. A Bill currently before Parliament seeks to remove a statutory obstacle to obtaining planning consent.

4. Other information

4.1 Additional specific information required by the Select Committee

The Select Committee has not requested any information which has not been addressed in this Memorandum.

5. Accounting Officer Approval

This memorandum has been prepared according to the requirements and guidance set out by the House of Commons Scrutiny Unit, available on the Scrutiny Unit website.

The information in this Estimates Memorandum has been approved by me as Departmental Accounting Officer.

Sarah Healey
Accounting Officer and Permanent Secretary
Ministry of Housing, Communities and Local Government
15 July 2024