Labour plans multi-year spending deals for councils

30 May 14
Labour has pledged to give local authorities multi-year funding settlements if it wins the next election, in a bid to end short-term spending decisions in public services.

By Richard Johnstone | 29 May 2014

Labour has pledged to give local authorities multi-year funding settlements if it wins the next election, in a bid to end short-term spending decisions in public services.

Shadow chief secretary to the Treasury Chris Leslie announced today the party would get the current budget into surplus and national debt falling as soon as possible in the next Parliament.

‘All my shadow cabinet colleagues know that the settlements we will need to make following the general election will be the toughest faced by an incoming Labour government for a generation,’ he said.

This will require tough decisions on spending, and the party's zero-based budget review would examine all spending from first principles, meaning departments will ‘face fundamental questions as never before’, Leslie said.

We won’t be able to undo the cuts that have been felt in recent years. And I know that this will be disappointing for many people. A more limited pot of money will have to be spent on a smaller number of priorities. Lower priorities will get less.’

However, the party would put long-termism at the heart of public spending plans, with multi-year funding settlements provided to a host of public services. This would end the problem of short-term decisions being taken in areas like local government, based on the need to make annual savings, Leslie stated.

For example, Chancellor George Osborne’s one-year spending review, which last year set departmental funding for 2015/16 would not be repeated.

‘We will instead set out Spending Review plans on a multi-year basis,’ he added. ‘And we would go further and expect departments in turn to provide public bodies and organisations under their stewardship with the same longer-term certainties, so they can make better decisions and plan for the savings they will need to make.’

Current annual budget rounds for local government and public bodies made it harder for them to plan the fundamental reforms needed to improve services, he said in a speech in London.

Examples of short-term decisions include cuts to the roads maintenance budget for local authorities, leading to the need to introduce of a new Potholes Challenge Fund in March’s Budget when extra funding was required.

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