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24.11.16

Councils ask for finance settlement as Treasury leaves ‘nothing to celebrate’

Building on its intention to move towards a single major yearly fiscal event, central government should use this opportunity to review the timing of the local government finance settlement and publish it “as soon as possible”, the LGA has urged.

The association’s chairman, Lord Porter, argued that bringing the finance settlement forward would give councils “more time to plan for the difficult [budgetary] decisions which lie ahead”.

The finance settlement was originally unveiled around this time last year, just a few weeks after the 2015 Autumn Statement. Then local government secretary Greg Clark said his proposals for a four-year funding settlement would provide councils with greater confidence and, indeed, a majority of councils have accepted the offer – despite concerns that authorities will face a ‘U-shaped funding curve’ as a result.

Although chancellor Philip Hammond confirmed in his Autumn Statement yesterday that he would no longer seek to achieve fiscal surplus in this Parliament, he reaffirmed his intention to identify another £3.5bn of savings in 2019-20 following an Efficiency Review. Up to £1bn of these savings will be reinvested in “priority areas”, and a progress report is expected in autumn 2017.

Similarly, while Hammond promised there would be no further welfare savings measures beyond those already announced, he did pledge to bump up the National Living Wage from £7.20 to £7.50 from next April. This is expected to pile further pressures on bloated council bills, with the Health Foundation estimating it will add “several hundred million” to care costs, for example. The Independent Age set this figure at £941m for councils.

The LGiU’s chief executive, Jonathan Carr-West, acknowledged that local government “wasn’t expecting any early Christmas presents” from the chancellor, but it was nevertheless “disappointing to hear him blame ‘higher spending by local authorities’ as one of the causes of a ‘weaker economic outlook’”.

“Of course, measures to boost productivity and support low and middle earning families will be welcome to councils. But what will really worry local government will be what the chancellor didn’t talk about,” Carr-West argued.

“Nothing about the role of local government in allocating and spending the National Productivity Investment Fund. Nothing about devolution beyond the major cities. Nothing about funding for social care.

“And nothing about how business rate retention is going to work and how local government will be financed in the medium to long term. This was presented as an upbeat Autumn Statement, but between the lines there was nothing for local government to celebrate.”

Jo Miller, president of Solace and chief executive of Doncaster Metropolitan Borough Council, said some of the Autumn Statement measures would stimulate housing and support infrastructure, but pointed to the “elephant in the room”: no announcements whatsoever about social care.

“Many across both sectors had hoped for some concession from the chancellor; a recognition of the seriousness of the situation and some clear measures to tackle it. It is disappointing that this has not happened,” she added.

“We can only hope that, in the public spending review the chancellor announced, the government is developing a serious plan to ensure the future sustainability of our health and care systems.”

Counties and districts

Counties, along with a plethora of other public bodies, also lashed out at the omission of any plans for social care, which they argue affects their regions the most – but welcomed some of the other announcements.

“But elsewhere, the government quite rightly put infrastructure and productivity at the heart of the Autumn Statement. This echoes calls from CCN for a broader, more inclusive economic policy that reaches all four corners of England,” said Philip Atkins, vice-chairman of the County Councils Network.

“Our submission made the case for investment in infrastructure, housing and transport in county areas. There are also indications that government are listening to our specific concerns over Local Growth Fund allocations; we will continue to work with ministers on this.”

District authorities were also positive overall, celebrating the “fresh approaches” the chancellor is taking to tackle the affordable housing challenge through greater flexibilities around the types and tenures of homes.

Cllr Neil Clarke, the District Councils’ Network (DCN) chairman, commented: “The DCN has long lobbied for infrastructure funding to support housing growth and therefore welcomes the chancellor’s additional infrastructure funding to unlock barriers to housing delivery.

The Housing White Paper will clearly be key and we will continue to work hard with ministers and officials to help shape it.”

He then added: “To help rebalance the national economy, new mayoral borrowing powers granted to combined authorities, and further devolution of powers for adult education and employment support services to London and Greater Manchester, should be more widely available as part of devolution deals to other parts of England.”

 

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