Give and take: has the Spending Review left councils up or down?

25 Nov 15

It’s not yet clear if changes to council tax and business rates can come on stream quickly enough to pay for vital public services

All spending reviews matter, but some matter more than others. That was the message ahead of this afternoon’s announcement. Most of the media coverage focused on the bear traps that awaited the Chancellor: a U-turn on tax credits and breaching his own welfare cap.

But those who thought the Chancellor might find himself on the ropes were confounded by a bravura, upbeat performance. Indeed, this was not the slash-and-burn budget many feared. The Chancellor was keen to emphasise that public spending cuts would be at half the rate of the last parliament and there were middle England giveaways on museums, sport and policing levels.

Of course, none of this should disguise the fact that we are still looking at significant year-on-year reductions in public spending. The key question for local government will be whether growth in business rates can keep pace with the reduction and eventual phasing out of the revenue support grant.

The Chancellor’s claim that local government will be spending more in cash terms by 2019/20 will be pored over. Most councils believe that they will still be making tough decisions about what services they can afford to maintain and how they might deliver them.

The politics of this are likely to remain difficult, as the PM’s recent public spat with Oxfordshire County Council demonstrates. In this sense the tax credit row may presage things ahead. There is still time for Conservative MPs to get cold feet as their constituents start to feel the impact of reduced street lighting, fewer refuse collections, or the closure of care homes.

The key question for local government will not be about cuts but about the other side of the ledger: local government’s ability to raise and retain money locally and to control local public spending. There was some good news here: more money in the local growth fund and Better Care Fund, confirmation of the abolition of uniform business rates, the ability to spend the proceeds of asset sales, and devolution deals on transport, planning and infrastructure are all good things. The ability to levy an additional 2% precept on council tax to fund social care will also be welcome. Though it is a drop in the ocean compared to the scale of the problem and this sort of ring-fencing is hardly what you might call localist.

But while these measures represent greater progress towards devolution than we have seen for decades, and should be welcomed, we have to ask the question about whether they will be enough – and can deliver results quickly enough – to protect the local services people want. There’s much more that we could do to achieve fiscal devolution: local tourism or green taxes, revaluation of council tax bands, local variation of top and bottom rates of income tax, multi-year budgets and single pools of money for local spending, for example.

If we are to realise the government’s ambition for a country that spends less but to greater effect, we need fuller and faster devolution to give every part of the country complete control over public services and over public finances.

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