This blogpost, written by Dr Jonathan Carr-West, was originally published by Public Finance.
Facing a further 10% cut, councils need radical autonomy on how they spend and raise money. Today’s Spending Review did not deliver that
For local government, the announcement in today’s Spending Review will be no less painful for being widely predicted. Once again councils have been asked to take the biggest cuts in the public sector with a further 10% reduction for the local government resource budget announced for 2015/16.
Many will find this an unjust desert for achieving savings of 26% over the current four years whilst, as the Chancellor acknowledged, largely maintaining public satisfaction (though some may think that it is too early to tell what the long-term impact on services of the current savings will be, let alone a further 10%).
As ever, much depends on the detail. The Chancellor argued that when all the changes affecting local government were taken into account the spending reduction would only be 2%, but it is likely that much of that difference will be accounted for in areas in which councils have no discretion over their spending.
Nonetheless, we are where we are, and the question becomes what does local government need to do to move forward on this financial basis? How do we plan spending and service delivery to ensure we are caring for elderly people, protecting vulnerable children, keeping our streets clean and doing all the other vital services councils are responsible for whilst operating within radically reduced resource base?
Apropos Grant Shapps’ comments yesterday, spending reserves surely cannot be a sustainable answer to this question!
The chancellor framed it in terms of a deal: increased powers over managing local budgets in return for reduced spending. New announcements today included further flexibilities on assets and a Single Local Growth Fund to which Local Enterprise Partnerships could bid.
Over the past couple of years, we’ve seen the potential in Community Budgets to drive savings and efficiencies, and in City Deals and business rate retention to drive growth. But we’ve also seen that there are issues transferring these approaches to two-tier areas and we’ve seen a reluctance from some of the big departments of state, notably Work & Pensions and Health, to really get behind them.
Today there were some steps in the right direction such as the commitment to taking £3bn out of the Health budget for joint commissioning of health and social care. But we also saw some retrograde steps, such as the freezing of council tax for another two years – something that research from the Local Government Information Unit shows is opposed by eight out of ten councils.
We know that long-term changes to our society, economy and environment all require us to think radically about what local services look like. But to do this to their full potential, councils need equally radical autonomy on how they spend (and indeed raise) money. This Spending Review did not deliver that.