What was missing from the Autumn Statement

23 Nov 16

The chancellor says he wants to build a resilient economy but without more certainty on funding, councils will not be able to plan ahead

Local government wasn’t really expecting any early Christmas presents from the chancellor. But a jovial Philip Hammond seemed determined to do his best Santa impersonation in an Autumn Statement setting out “an economy that works for everyone”.

This is all very different to where we were a year ago. The chancellor offered fulsome praise to his predecessor but he went on to comprehensively bury him. “Times have moved on,” he said.

The target for balancing the national budget was pushed back to “as soon as practicable” in the next parliament. The centrepiece of the statement was a comprehensive programme of investment in productivity and innovation with a new £23bn National Productivity Investment Fund. To paid for by additional borrowing no less! George Osborne’s smile looked somewhat forced.

As trailed in the press there were giveaways for the so called “just about managing": a freeze in welfare cuts, an increase in the national living wage, raises in the personal tax allowance, continuing rises in tax thresholds, a reduction to the universal credit taper rate and for the seventh year running no rise on fuel duty.

Much of this will come as good news for local government.

Additional investment in housing, transport and infrastructure are all welcome as is the focus on improving productivity and ironing out regional inequalities. Measures to support low and middle earning families will also benefit local government by reducing pressure on public services.

However, there were also four aspects of the statement that will be worrying for local government, as much for what was not said as what was.

First, the National Productivity Investment Fund sounds somewhat centralised: how will this money be allocated and who will spend it? We heard about money for LEPs and for housing associations. Where are local authorities in all this? If we want an effective regional growth strategy it has to be locally based, area specific and responsive to the needs and aspirations of local communities. This is hard to achieve from Whitehall, or by organisations that do not have a democratic mandate.

Second, while the chancellor claimed “devolution remains at the heart of this government” we heard nothing about devolution beyond the major cities. Philip Hammond talked about additional powers for Greater Manchester, London and the Midlands Engine and about additional City Deals, but what is the future of devolution in non metropolitan England? There is a real danger that this agenda could collapse without additional energy from government. But there was no sign of that energy in today’s statement.

Third, despite repeated representations form the sector there was nothing about financing adult social care: the single biggest pressure point for local government and a system that many believe close to all out collapse.

Finally, the one thing local government would have washed for above all would have been some clarity about local government finance reform. How will 100% business rate retention work? What sort of redistribution mechanisms will there be? Of this we heard nothing. Though we did hear about a further cut in business rates which will throws further doubt on their sustainability as a finance source.

Without some certainty about how local government is going to be financed in the medium and long term. It is impossible for local authorities to plan strategically. We’re still waiting for that.

The chancellor promised a “resilient economy” but local government will not be feeling any more resilient this afternoon.

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