The chief secretary to the treasury has said that children with special educational needs are a “real priority” in the spending review, which she insisted would cover a three year period.
Speaking at a Local Government Association debate on the spending review, Tory leadership hopeful Liz Truss (Con) said she knows that the early years are “incredibly important”.
“We recognise that more funding is needed in special educational needs and children’s services, and I am looking at that in the spending review,” she said.
“Councils are spending more money on that, but I don’t want to see that squeezing the schools’ budget because we see that schools are under pressure.
“Those children with special educational needs are a real priority in the spending review.”
Despite suggestions that the government could abandon plans for a three-year spending review in favour of a one-year review because of Brexit uncertainty and questions over Theresa May’s leadership, Ms Truss said: “We are working on the basis of a three year spending review, which I know will be helpful for all kinds of public bodies.” She said the process would be launched before the parliamentary summer recess and would cover the period until 2023.
Ms Truss said that she has been travelling around the country, asking people their priorities for public spending, and that “education and the health service” are top of their lists.
When asked about the idea of slicing the NHS funding pot so that a portion goes to local government for prevention programmes, Ms Truss said: “We are looking at this at the moment, at which programmes have been successful at doing that and which have not.
“Sometimes, you end up with lots of different funding streams and we need simplicity and accountability. For example, the public health grant, we could get more value in the future.
“We need to devolve more services. They need to be developed in different ways in different parts of the country.”
Ms Truss dismissed suggestions that taxes would need to increase to fund social care, claiming that there were still lots of areas of inefficiencies where government can make savings, such as “business support”. “We spend £18bn a year on supporting businesses – and some of them are large businesses. We could simplify that and get better value for money from it.”
Ms Truss backed greater devolution of powers and taxes and spoke of the need to recognise that “local government needs more freedom to do things differently” so “more money spent locally is raised locally, and local politicians are more accountable to their electors”.
Reflecting the financial stresses that councils in England are now under, one finance officer in the audience said that without certainty over what funding is available from April 2020 onwards his council is facing £36m costs and is only able to raise £3m.
Ms Truss replied: “I want to make sure that local government funding is sustainable. We are still a very centralised country. The next three years is going to be more of a transition about how we get there. But you need to be realistic about where we can get to in the next three years.”
She highlighted a recent report from the Institute for Fiscal Studies which concluded local income tax would be the best option for fiscal devolution if the government wanted to hand more power to councils. According to their calculations, a 3% local income tax levy on all tax bands would raise around £19bn, which is around 40% of councils’ core budgets.
Ms Truss referred to this as a “very interesting idea”.
Ms Truss said the government should be continuing to reduce business rates and spoke against “penalising successful online retailers” by taxing digital companies. “Business rates should be simplified. It should be a level playing field, we shouldn’t slap it on everybody.
“We have a high rate of business tax in this country which is not helpful. We need to look at other money raised locally…
“Local authorities and local communities need to get more benefits of business success so if more houses are built and businesses started up, they need to see more of the proceeds.”