Economy and Infrastructure

19.04.18

Councils must start preparing for the Autumn Budget now

Source: PSE April/May 2018

This year will provide the opportunity to develop conversations about local government finance in order to ensure councils stop running on empty, explains Jennifer Glover, policy researcher at the LGiU.

In the wake of a very underwhelming Spring Statement, local government must start looking ahead to the Autumn Budget as a matter of urgency to make sure councils’ concerns are heard.

In fairness, local government wasn’t the only sector left empty-handed; Philip Hammond did not announce new taxes or policy, choosing instead to simply report on the country’s economic status and leave the big announcements for his main event in autumn. However, many criticised the chancellor for failing to address, or even acknowledge, the growing crisis in local government which is now capturing the attention of national press and the public. 

Councils are running on empty and are scrambling to prevent their authority following Northamptonshire into the disaster zone. Eight out of 10 councils are concerned about the sustainability of their finances according to LGiU’s annual State of Local Government Finance survey, released in February. 

Meanwhile, at a recent Housing, Communities and Local Government Select Committee meeting, the new minister for local government, Rishi Sunak, was questioned on the ministry’s timeline for clarifying details of the new funding system, including the business rates retention scheme and the Fair Funding Review. His answer: late 2019.

The gap between these pictures is stark. Councils cannot wait until they are setting their 2020 budget to know how much money they will have that year and beyond, or where they should be investing their resources in preparation.

Typically, local government finances only hit the headlines once a year when councils are setting their budgets and council tax rises are being considered. This year we have the opportunity to break this cycle and keep the conversation going. The continuing momentum from LGiU’s State of Local Government Finance survey, the National Audit Office’s concerning forecast about future failures, and the Institute for Fiscal Studies’ analysis warning of significant divergences between councils’ spending power has laid the groundwork for a meaningful public debate.

Amplifying local voices

It is imperative that local government makes its voice heard in the run-up to the Autumn Statement. Given the paucity of new legislation and spending commitments from government since 2016, there are many issues crowding the agenda which have strong claims to Treasury attention. The key will be having clearly articulated demands and public support. We must be able to demonstrate that working with local government is the key to addressing all of Whitehall’s top policy priorities – Brexit, Industrial Strategy, housing and the NHS – and as such, councils must be treated as equal partners in developing and delivering policy in these areas.

The government is running several consultations over the next few months, many of which directly impact upon the work of councils – and those working in local government must ensure they engage with them. The delayed social care green paper is now due in summer and will hopefully posit long-term solutions to improve service quality and consistency, upon which councils are best-placed to advise.

Several new enquiries were announced in the Spring Statement, including reducing plastic waste (which will affect council waste services), looking at taxes for digital businesses (which will affect the level of business rates retained by councils), and boosting skills (much of which will be delivered by councils). There will also be an investigation into the gap between the number of planning permissions granted and houses built and, given the prime minister’s seeming willingness to take away planning powers, councils must put their case forward forcefully on housing.

By the time the Autumn Statement comes around, we will also have the early results from the new business rate retention pilot schemes and the feedback from councils on implementing the Homelessness Reduction Act. This new evidence will also be useful in putting together a clearer picture of the current financial situation in local government.

Finance taskforce

LGiU has launched the Local Finance Taskforce as a response to the continued delay in addressing the funding situation in councils.

We are working with senior local government representatives and sector experts to raise the profile of these issues to a wider audience and force the government to provide much-needed policy clarity. We believe it is essential for local government voices to be heard in these debates in order to reach a solution that actually works for local communities.

Senior councillors and officers are speaking with one voice on this issue, regardless of politics or tier, as demonstrated by the responses to our annual State of Local Government Finance survey. We asked them what they want to see from government, and they are calling for:

  1. A formal consultation on all the options for the future of local government funding;
  2. A commitment to maintain a consistent level of funding for three years;
  3. A commitment to cover costs to local government associated with future changes to business rate policies;
  4. Clear vision for the future of adult social care and devolution, in order to facilitate forward-planning and investment.

We can’t afford to allow the issue of local government funding to remain off the agenda any longer. We have a unique chance to shape the narrative at this juncture. The Local Finance Taskforce, alongside local government, need to push this conversation forward and secure a better deal for local government.

Top image © NurPhoto / PA Images

 

FOR MORE INFORMATION
W: www.lgiu.org.uk/policy-theme/local-finance-taskforce

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