England & Wales Democracy, devolution and governance, Economy and regeneration, Finance

What to expect from the budget on Wednesday?


What to expect from the budget on Wednesday? LGiU will be providing our usual on the day briefings and comment to give our members an instant take on the announcements relevant to local government.

There have been some hints already leaked to the press and the usual swirl of rumours.

We’re expecting some announcements on housing that are trailed as giving councils more ability to build.

There are also indications that the government will seek to clamp down on councils making commercial investments or at least using borrowing from the Public Works Loan Board to do so.

This has raised some consternation in local government circles – our finance survey earlier this year showed that 7 out of 10 local authorities were planning to borrow from the PWLB and 8 out of 10 were investing in housing and commercial development.

Obviously it’s important that any commercial activities councils undertake are subject to proper due diligence and risk assessment: as of course they are (something we seem to need to repeat until we’re blue in the face).

But there is an important, and galling, point of principle here. The direction of travel on local government funding for the last seven years had been towards greater fiscal autonomy. Local government will receive less in grant but will have more ability to generate revenue for itself.

Some people disagree with this of course and argue that the only route to real sustainability is proper funding from the centre which is based on differing levels of need in different parts of the country.

These are both coherent positions on which reasonable people may differ.

What’s not coherent is for one part of government to demand that councils stand on their own two feet while another part of government systematically removes the capacity for them to do so.

And this points to a broader issue on local government finance reform. There seems to be a consensus now that 100% business rate retention is unlikely to happen – especially with the absence of a legislative instrument though which to achieve it. The pilots are still happening and indeed more councils are bidding to become pilots. But the overall policy which you would expect the pilots to lead to is not there.

Will we see any of this addressed in the budget? We can only hope.

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