Sector Reaction
Sector Reaction - Budget 2012
Quotes from the sector as they come in on the Budget
All statements have been supplied via press releases, if you wish to submit your comment on the Budget please email it to lgcnews@emap.com
CIPFA
CIPFA’s Lead for Local Government, Alison Scott, has welcomed the recognition in the Budget of the importance of prudential borrowing by councils to boost local economies.
“Councils are vital to the success of their local areas and access to reduced PWLB rates will help them to maintain crucial investment where it’s needed most.
“We look forward to working with the Treasury to ensure that this additional information provided by councils supports the continued success of the Prudential Code.”
COMMERCIAL
KPMG
Richard Threlfall, head of infrastructure, building and construction at KPMG, said:
“Infrastructure remained at the top of the political agenda today, earning mention by the Chancellor in the first minute of his budget statement.
“The big news however was the deal with Manchester. Under the agreement with the Treasury as the Manchester economy grows and generates additional taxes a proportion of these taxes can be used on local Manchester transport projects.
“The city will reclaim £30 million a year from the Treasury and reinvest it in further infrastructure development, which could include new roads or light rail extensions. Manchester is the first city to secure such a deal and can we confidently predict the UK’s other major cities rapidly forming a queue at the Treasury’s door.”
May Gurney
Philip Fellowes Prynne, CEO May Gurney stated:
“George Osborne’s announcement of an extra £270million for the Growing Places Fund is welcome news for communities as they look to develop transport and utility infrastructure as a basis for attracting business and fuelling growth. Local authorities and private sector partners, working via LEPs (Local Enterprise Partnerships), are better placed than most to identify the infrastructure investments that will help drive economic recovery and create jobs in their area. Private sector organisations should be using this as an opportunity to open discussions with local authorities, which help them deliver better outcomes for their area in light of the overall cuts in public sector spending that we have seen in response to the recession.”
RIBA
Speaking about the Budget, RIBA Head of External Affairs Anna Scott-Marshall said:
“The 2012 Budget underlines the importance of new development and infrastructure in kick-starting growth in the economy. City Deals, the introduction of TIF and the expansion of Enterprise Zones could equip cities with the necessary tools to help them develop and grow.
“Whilst the RIBA welcomes the additional funding for the Get Britain Building scheme, we urge the Government to ensure that developers and developments selected for funding meet the highest quality credentials so homebuyers benefit as well as house builders.
“We look forward to seeing the details of the NPPF when it is published and comes into force next week”
LGA
Responding to the Budget announcement on right-to-buy, Cllr Sir Merrick Cockell, Chairman of the LGA, said:
“The Government was urged to allow local places to decide right-to-buy discounts themselves, which hasn’t transpired. The centralised right-to-buy cap of £75,000 fails to take into account local housing demand and the cost of building new homes. This means that in some areas the one-for-one replacement of homes that the Government has promised may not be delivered.
“The LGA lobbied for councils to keep 100 per cent of right-to-buy receipts and that remains possible. However, given this can only be used to meet 30 per cent of new build costs; in practice keeping the receipts may not be possible for many councils.
“While the proposals may benefit tenants wanting to join the housing ladder, the public purse will have suffered because councils will have to sell houses off at a price lower than needed to increase take up of right-to-buy. That delivers poor value for public money at a time when we should be squeezing maximum value from every pound.
“We are urging government to monitor the impact of the policy and review the discount level in April 2013.”
Responding to the Chancellor’s comments on the number of local authorities freezing council tax for 2012/13, LGA Chairman Sir Merrick Cockell, said:
“With cuts to local government funding set to continue until 2017, and pressure mounting in costly service areas such as adult social care, children’s safeguarding and road maintenance, councils have to make tough decisions on how they prioritise spending on the 800 services they provide to residents. That includes deciding whether or not to shield some services from budget cuts by increasing council tax revenue. These decisions must be based on local priorities and councillors know they will be judged solely by the people they represent when the votes are cast in local elections.”
Responding to the announcement that the Government would make £150 million available to councils for Tax Increment Financing, and a further £270 million available for the Growing Places Fund, LGA Chairman Sir Merrick Cockell, said:
“We desperately need to unlock local government’s potential to drive economic growth and create jobs. Tax Increment Financing could be a significant tool in making that happen by allowing councils to quickly bring forward and start work on much-needed infrastructure. Today’s announcement of £150 million in TIF could help get a very small number of projects off the ground, but given the size of projects being looked at by some local authorities it could be limited to helping just one.
“We want to see much more ambition. The Government has missed an important opportunity by not allowing all areas that can demonstrate a clear business case to get TIF schemes underway without unnecessary delay or bureaucracy.
“It’s pleasing that the Government has listened to our arguments for targeted investment in local growth and made additional money available for the Growing Places Fund. The £270 million will allow the local areas which secure investment to get projects off the ground much earlier.”
Responding to the announcement of a lower borrowing rate for local authorities, LGA Chairman Sir Merrick Cockell, said:
“Councils generally have as good a credit rating as the Exchequer. The LGA will seek a meeting with the Treasury at the soonest possible date to discuss ways in which councils can straightforwardly and efficiently access borrowing facilities at rates that reflect the market’s assessment of local authority creditworthiness, not at a Treasury determined premium.
“In our pre budget submission we called on central government to put more of the levers of job creation and growth into the hands of councils by helping them access the funding they need to tackle Britain’s £200 billion infrastructure deficit. A key driver of national economic recovery is local development and we are pleased that the Government now intends to introduce, within the current prudential borrowing arrangements, a more competitive borrowing rate for councils. We see no reason for delaying this change and believe it should be introduced immediately.”
Responding to the Budget announcement on city deals, Cllr Sir Merrick Cockell, Chairman of the LGA, said:
“In principle it is positive that the Government is allowing cities to request additional powers. But it is important that any local place should be able to seek greater powers - and not just towns and cities.
“There also needs to be a more systematic approach towards these deals - to ensure that the benefits for local residents can be maximised.
“City deals are not a panacea for growing local economies, which also need proper investment in infrastructure. Councils are already helping to deliver future growth but new powers can take them to the next level.”
Responding to the Chancellor’s comments on planning in the Budget announcement, Cllr Sir Merrick Cockell, Chairman of the LGA, said:
“The LGA has been calling for a more localised approach to planning for quite some time in order to help boost local economies and to give residents a greater say.
“However, the LGA has been clear that Government’s approach to sustainable development must balance economic, environmental and social issues more equally in order for communities to be able to secure the development that meets their needs. Doing so will protect the ability of local elected councillors to make decisions in the interests of their local area in accordance with Local Plans - which councils are working hard to implement.
“It remains crucial that the Government puts in place realistic transitional arrangements to give councils time to introduce Local Plans and the LGA will continue to press for this.”
THINKTANKS
IPPR
Reacting to the Budget statement, Nick Pearce, IPPR Director, said:
“George Osborne has missed the opportunity to jump start the economy. Rather than raise the personal allowance and lower the top rate of income tax, he should have cut employer national insurance in the same way the Barack Obama has boosted the US economy with a consumer stimulus.
“US unemployment has fallen for nine months, while UK unemployment has been rising for nine months. The UK still desperately needs a ‘jobs guarantee’ to ensure that more than 800,000 people who have been out of work for more than a year get back to work or risk losing their benefits.
“There are better ways of helping low income families than raising the personal allowance and cuts to Working Tax Credits will really hit working families.
“Closing the loop hole for foreign buyers using companies to purchase homes is a welcome move, but he should have gone further and introduced a mansion tax. Stamp duty at 7% on £2 million mansions will help but more action is needed to prevent the super-rich from using the London housing market as a ‘global reserve currency’ and to tax housing wealth, not just transactions.”
“The child benefit ‘cliff edge’ move is simply tinkering at the edges. The Chancellor should have gone back to the drawing board. It would have been better and bolder to invest in universal childcare by freezing child benefit for 10 years.
“The big surprise was the £1bn raised by the freezing pensioner tax allowances, which is a controversial but welcome move to spread the burden of deficit reduction to include pensioners.”
THIRD SECTOR
Child Poverty Action Group
Responding to the Budget, the Chief Executive of Child Poverty Action Group, Alison Garnham, said:
“This budget has been massively oversold as a budget for working families. The help being given to hard-pressed families through the income tax system will be blown out of the water by the multiple raids on the tax credits the poorest families depend on.
“The £2 billion bombshell of cuts to support for the poorest working families is still set to strike next month. The Budget will do nothing to change the dire warnings from the Institute for Fiscal Studies that child poverty is set to rise from now on, with another 400,000 children in poverty by the end of the parliament.
“The Treasury has published analysis today showing that the poorest half of British people will be making a greater contribution to deficit reduction than 4 out of 5 people in the richest half. For all the spin about fairness, the Treasury’s own figures tell a radically different story of a reality in which it is the poorest who are being made to carry the greater burden.
“Hundreds of thousands of the poorest working families will gain just £33 a year, instead of £220 as claimed, from the tax threshold rise because of the withdrawal of housing benefit and council tax benefit at 85%. A rise in the earnings disregard for these benefits of just £4 a week would ensure they get the same gain as middle earners.”
On the changes to proposals for withdrawal of child benefit from higher earners, she added:
“The Chancellor has taken a step in the right direction, showing he has listened to our campaigning, but the new claw back will be complicated and costly to administer. In the end, we are still asking families with children to pay for tax breaks for the very richest. This does not pass the fairness test - it would be fairer to ask all high earners make a contribution than just to target families with children.”
NCVO
Sir Stuart Etherington, Chief Executive of NCVO, said: ‘This is certainly not “George’s Marvellous Medicine” for the charity sector, and only goes a little way towards sweetening the bitter pill of the multiple financial pressures currently hitting the sector.
‘The cap on income tax reliefs for donations really sets alarm bells ringing, as it could impact negatively on income from donations. Eight per cent of donors give almost half of the amount that is given to charities every year, so this measure could have very serious consequences. It is positive though that the Government has pledged to work with philanthropists to explore ways of reducing this impact.
‘There are positive early signs around the rising significance of social investment. We hope that the Treasury will use their review to look more comprehensively at the benefits that specific technical tax changes can make to the level of investment in social ventures. There is some way to go to support what could be a world leading industry.’
‘We also await with interest clarification on whether some of the measures announced - such as credit easing, simplification of tax for small businesses and enterprise loans for young adults to set up their own businesses - will also be extended to the voluntary sector and social enterprises.
‘The advice services fund is a step in the right direction for supporting these vital organisations, which were hit particularly hard by falling income and escalating demand during the recession. Given that that advice sector stand to lose around £100m in the next year as a result of spending cuts and changes brought in by the Legal Aid Bill, we hope that the Government will do all that it can to support these vital organisations.’
Scottish Local Government Forum Against Poverty
Councillor Matt Kerr, Chair of the Scottish Local Government Forum Against Poverty, said: “Cuts to tax credits take effect from April and will seriously reduce the ability of hardworking low and middle income households to pay their bills. Local authorities across Scotland can help soften the blow for their local residents by making sure that households receive the increased levels of Housing and Council Tax Benefits that they will be entitled to as a result of their income from tax credits falling. I call on all local authorities to be proactive in supporting their residents by using the information they already hold to identify and contact affected households.”
UNIONS
Unison
“This budget is not a road to recovery but a Road to Nowhere - No jobs, No growth, No idea.” This is the damning verdict of UNISON chief Dave Prentis on George Osborne’s budget today (21 March).
The union accused the Chancellor of sucking demand out of the economy and reverting to the same old Tory tactics, of promising tax cuts just before the next election.
Dave Prentis, General Secretary of UNISON, the UK’s largest union, said: “The Chancellor’s budget has given a helping hand-out to his rich friends in the City and delivered a slap in the face to the unemployed and low paid families.
“Osborne should be delivering policies to get the 2.67m unemployed people back into work and economically active. Instead, the Government’s cuts agenda is making the situation worse by adding to those numbers month by month. Since the coalition came to power, we have seen 625 public sector workers joining the dole queues every single day, bringing misery to hundreds of thousands of families.
“Far from encouraging economic growth, the Chancellors’ policies are sucking demand out of the economy. Public sector workers are being hit with a pay freeze again this year and now the Government are proposing local pay which mean £1.7bn would be lost from the economy. Taking money out of the pockets of hard working people will starve local shops, cafes and businesses out of much needed revenue sending the economy further downwards.
“The Chancellor’s budget gives with one hand and takes with the other. The increase in the personal allowance will help those who are working - but offers no relief for the unemployed. And we know that the Government has already announced cuts to tax credits which hits hundreds of thousands of working families with children.
“Osborne’s budget flies the Tories true blue colours, but is a missed opportunity to restore desperately needed jobs and growth to the economy.”
