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FINANCE SUPPLEMENT - TIM STRETTON

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Tim Stretton ponders the implications of the 2006 Budget...
Tim Stretton ponders the implications of the 2006 Budget

Budget consultation has become big business for councils over the past few years. One of the tools often employed to establish public priorities is 'forced choice', a zero-sum game in which the subject is given a fixed amount to allocate across different services. In this way, the relative priorities can be determined, against a background of constrained resources.

Chancellor Gordon Brown's Budget performance last month put me in mind of a forced choice. The package he announced was fiscally neutral over the next two years - his extra public spending in 2006/07 being offset by higher revenue in 2007/08. Essentially, he presented himself with a zero-sum game, and it is instructive to see what he has done with the choice. His pile of beans has been put almost exclusively on the education counter, with nothing extra in real terms for the Home Office and big real terms annual reductions for the back-office departments. If prime minister Tony Blair's 1997 election mantra: 'education, education, education', was slipping from our minds, Mr Brown's Budget has brought it back to the fore.

Mr Blair's manifesto captured the mood of the times; Mr Brown is gambling that it will do so again. At a time when public dissatisfaction with the health service is running higher than ever, it is a brave choice. He used his Budget speech to announce a public debate on the priorities for the spending review of 2007, but in allocating the bulk of his largesse to education, he has clearly cast his own vote early.

In a zero-sum game, for someone to win, someone else has to lose. So what does this mean for local government services in the 2007 comprehensive spending review? With education absorbing most of the extra, social services must be bracing themselves for the worst. If experience is anything to go by, the new health and social care white paper will create more budgetary pressures, at a time when the Local Government Association and directors of social services are already warning of a£1.8bn funding gap.

Mr Brown also talked up his green credentials, but the decision not to set up a separate waste block in the 2006/07 settlement strongly suggests that waste will get another poor deal in the spending review. Highways, which had to settle for a cash freeze in 2004, will also not be rubbing their hands in anticipation of any better this time around, despite unit costs far outstripping the retail price index.

The 2006/07 settlement has already shown the government's hand. Schools have seen a funding increase of 14% over two years while other local government services have had to make do with half that. Mr Brown may be gearing up to be the new prime minister - but for local government it looks like the same old story.

Tim Stretton Chief technical officer, West Sussex CC

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