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17.11.16

Autumn Statement must move beyond financial ‘annual sticking plaster’ – CIPFA

The government should use the forthcoming Autumn Statement to boost the economy and improve the sustainability of public services, the Chartered Institute of Public Finance and Accountancy (CIPFA) argued.

In its submission ahead of the Autumn Statement, CIPFA welcomed the government’s decision to abandon the target of eliminating the deficit by 2020, and predicted that the statement from chancellor Philip Hammond (pictured) would “relax some of the austerity measures and fiscal targets”.

But it argued the statement must focus on the medium to long term outlook, with strategic investment to stimulate economic growth, rather than focusing on short-term fixes.

Rob Whiteman, chief executive of CIPFA, said: “Public bodies need medium-term financial solutions and not an annual sticking plaster.

“This has been a year of extraordinary political surprises, both in the UK and abroad, which has meant there is growing uncertainty and mounting problems for the public sector. Public bodies should be given greater flexibility to use the resources on their balance sheets to support service delivery, including flexibility to borrow to invest.”

A recent report from the Institute for Fiscal Studies (IFS) predicted that government borrowing will increase by as much as £25bn above the predicted levels by 2019.

In its submission, CIPFA also called on the government to consider the impact of previous spending decisions on public services, as well as the potential consequences of leaving the EU, in its spending decisions.

It stated that economic considerations should be “UK-wide”, with support for industry, clarity on EU funding and potential devolved powers over borrowing and investment provided to all the countries in the UK.

It also joined the chorus of calls for the Autumn Statement to address the crisis in health and social care funding. A recent joint report from the King’s Fund, Nuffield Trust and Health Foundation, for example, said that the crisis in social care is so severe that councils could face legal action for failing to fulfil their statutory obligations.

CIPFA argued this boost should include setting the minimum percentage of GDP to be spent on the health and social care system, increasing public health spending, and bringing forward the full £1.5bn Better Care Fund to 2017-18.

In addition, the organisation said the move to 100% business rates retention should be accompanied by “a balance between incentivising growth and support for higher need councils”, including allowing local authorities additional freedom to borrow.

CIPFA also recommended using flexible investment, sustainable rent policies and retention of assets to make it easier for councils to tackle the housing crisis.

PSE will be providing rolling coverage of the Autumn Statement on 23 November, as well as any other submissions made ahead of the document.

(Image c. Isabel Infantes from EMPICS Entertainment)

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