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Specific Budget announcements relevant to Local Government


On Wednesday 21 March the Chancellor of the Exchequer presented his Budget for 2012, setting out the Government’s plans for the economy and public finances in the year ahead.

This post sets out the initial announcements relevant to local government from the Budget.

Budget Overview

  • Increasing income tax personal allowance by a further £1,100 in April 2013, taking it to £9,205 in total;
  • Reducing the top rate of income tax from 50 per cent to 45 per cent in April 2013;
  • Child Benefit will be withdrawn through an income tax charge from households where someone has an income over £50,000 a year. The withdrawal will be gradual for households where someone has an income between £50,000 and £60,000;
  • Reducing the main rate of corporation tax by an additional one per cent, so that the rate will reduce from 26 per cent to 24 per cent in April 2012, to 23 per cent in April 2013 and will come down to 22 per cent by April 2014.

Local Government

Local authority borrowing

The Government will introduce in 2012-13, a 20 basis points (bps) discount on loans from the Public Works Loan Board (PWLB) under the prudential borrowing regime for those principal local authorities providing improved information and transparency on their locally-determined long-term borrowing and associated capital spending plans. The Government will also work with the local authority sector to consider the potential for an independent body to facilitate the provision of PWLB lending at a further reduced rate, to authorities demonstrating best quality and value for money.

Growing Places Fund

The Government will increase the Growing Places fund by £270 million to empower local communities and businesses to lead development in their own areas, including £70 million for the Greater London Authority.

Manchester Earn Back Model (EBM)

The Government will provide up to £30 million a year of funding from 2015–16, to support Manchester’s EBM, a new pilot for infrastructure investment.

Tax Increment Financing (TIF)

The Government will make up to £150 million available from 2013–14, including through additional funding, to support TIF 2 in core cities. Further details on a competition for allocating funding will be announced later in 2012.

Transport for London

The Government intends that Transport for London (TfL) should receive funding from a locally-retained share of London’s business rates that will allow the Mayor of London to continue sustainable investment in transport and is considering options for how this might be achieved.

Local council tax support schemes

The Government will provide £30 million to local authorities in England towards the transitional costs to new local support schemes for council tax


The new National Planning Policy Framework is to be announced next week.


Lord Heseltine will undertake an independent review of how spending departments and other relevant public sector bodies interact with the private sector, and assess their capacity to deliver pro-growth policies. This will include a benchmarking exercise comparing how other competing economies implement their industrial strategies. The review should conclude in early autumn 2012.

Developing a national roads strategy. The Government will also consider whether to go further and carry out a feasibility study into new ownership and financing models for the national road network;

Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, London, Manchester and Newcastle to become broadband super-connected cities, as part of the £100 million investment announced at 2011 Autumn Statement.

£50m will be used to fund a second wave of smaller cities.

The establishment of a new Pension Infrastructure Platform owned and run by UK pension funds, which will begin its initial £2 billion investment in UK infrastructure by early 2013.

Relax Sunday trading laws during the Olympics and Paralympics;

Energy and Transport

Consult on simplifying the Carbon Reduction Commitment (CRC) energy efficiency scheme to reduce administrative burdens on business. Should very significant administrative savings not be deliverable, the Government will bring forward proposals in autumn 2012 to replace CRC revenues with an alternative environmental tax, and will engage with business before then to identify potential options.

Publish a strategy for gas  generation in the autumn, recognising that by gas-fired electricity generation will continue to play a major role in UK energy supplies for the next decade and beyond.

Introduce a package of tax measures to secure billions of pounds of additional oil and gas investment in the UK Continental Shelf;

invest £60 million to establish a UK centre for aerodynamics which will open in 2012–13 and support innovation in aerospace technology, commercialise new ideas and spin-off technologies with wider applications in other sectors;

support Network Rail to invest a further £130 million in the Northern Hub rail scheme, subject to value for money, to improve transport links between Manchester and Sheffield, Rochdale, Halifax, Bradford, Bolton, Preston and Blackpool, and to increase capacity on the Hope Valley line between Manchester and Sheffield, which will enable the number of fast trains to double.

LGiU will be publishing a full member briefing shortly.