Budget 2016: certainty isn’t what it used to be for councils

16 Mar 16

The chancellor made great play of delivering stability, but after today's announcements this feels further away than ever for local government.

“We choose to put the next generation first”. It’s a golden rule of politics that when someone insists, as George Osborne did repeatedly today, that they are making tough decisions for the benefit of the next generation: you know you’re in trouble now.

And so it proved, despite positive messages on jobs and inflation, there was no mistaking that this budget centred around a massive downgrading in growth forecasts.

Thus the chancellor announced tough measures to act now before it was too late most notably a further £3.5bn in public sector savings by 2019/20. It’s not yet clear where exactly this somewhat sizeable axe is to fall: there will be an efficiency review in 2018. But given ring fencing of health and education, local government could be forgiven for fearing that it is going to shoulder a large part of it, despite Greg Clark’s promise that the recent funding settlement  “protects the resources available to councils over the next 4 years… and offers councils the certainty of a four-year budget.”

Certainty, it seems, is not what it used to be.

And of course cuts elsewhere, to disability benefits for example, tend to create additional demand and thus additional costs for local authorities.

Indeed it is these indirect costs that could prove more pernicious. Government’s intention is that councils should be financially self-sustaining by 2020 with the removal of the revenue support grant. In principle removal of government funding ought to remove the government’s ability to cut funding but cuts to specific grants and knock on costs could still have a big impact.

And of course the financial independence associated with the retention of business rates had a clear limit signalled today with government announcements about moving small businesses out of business rates. Local government is to be compensated for this lost revenue - though we don’t yet quite know how or to what level – but there is a clear message from government: on the one hand we are abolishing universal business rates and allowing councils to keep 100% of revenue, but on the other hand we will swoop in and make wholesale changes if we think it expedient.

Local leaders across the country would be forgiven for fearing that what is given with one hand is, if not quite taken away, then at least more tightly gripped, in the other.

Autonomy is not what it used to be either.

Of course there was positive news around new devolution deals though this agenda seems to be moving more slowly than many hoped, but overall this was not a budget that will have calmed many nerves in the sector.

The chancellor made a great play of delivering stability, but for local government stability feels further away than ever.

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