05.12.13
Osborne raises housing revenue account borrowing cap by £300m
Local government and the communities department mostly escaped any further cuts in today’s autumn statement, in which chancellor George Osborne announced £1bn in loans for blocked developments and a rise of the Housing Revenue Account borrowing cap by £300m.
He name-checked blocked housing developments in Manchester and Leeds but said others around the country would also benefit from the move.
These announcements have been cautiously welcomed by the LGA, whose chair Sir Merrick Cockell said: “The easing of restrictions on housing investment announced today does not go as far as we would like, but it does show that our call for more local flexibility to drive economic growth has been recognised.”
The government also promised to clear the backlog of business valuations for rates purposes by July 2016.
The chancellor announced a cap on welfare spending – except for state pensions and jobseekers’ allowance – and a reduction in Whitehall departmental budgets of 1.1% for 2014/15 and 2015/16. Health, schools and some others are exempt, as is local government – because, Osborne said, the government “expects” a council tax freeze.
He also removed the cap on university places, funded by selling off student loans.
Sir Merrick’s full statement is below: “Local government has already played a huge part in reducing the deficit and the Chancellor has today acknowledged that any further cuts on top of those already announced would push some councils to breaking point.
“At a time when local authorities are contending with the biggest cuts in living memory, there are signs in this Autumn Statement that local government is being listened to. Councils have consistently been calling for the Treasury to remove the housing borrowing cap which hampers our ability to build new homes. The easing of restrictions on housing investment announced today does not go as far as we would like, but it does show that our call for more local flexibility to drive economic growth has been recognised. Our concerns about potentially costly changes to the New Homes Bonus have been taken on board in the revised proposals announced today. This is good news for local services which otherwise would have taken an additional £400m cut.
“By the end of this Parliament, local government funding will have fallen by £20bn – a cut of 43%. The next two years will be the toughest yet for people who use and rely on the vital everyday local services that councils provide. So far local authorities have largely restricted the impact of the cuts on their residents, working hard to save those services that people most value and protecting spending on social care for children and the elderly. But even these areas are now facing reductions. That impact will only increase over the next two years.
“The commitment to a permanent health and social care fund is a valuable step in the right direction but as the LGA has consistently argued, adult social care needs to be put on a sustainable financial footing or services will suffer.
“The current public sector model, with its highly centralised control of budgets and spending priorities, is inefficient and will struggle to function in the context of long-term cuts to public spending. We need nothing less than a fundamental reform of the way the public sector works and an honest reappraisal of what public services should look like in post-austerity Britain and how they should be paid for. Without it we risk an upturn in the economy coinciding with a collapse in public services.”
(Image: PA Wire)
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