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Brexit funding farce and ‘Tigger’s’ misplaced optimism

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LGC’s commentary on the spring statement.

It was no surprise that today’s spring statement provided no significant surprises.

Long trailed as merely a quick update on the state of economy and public finances, chancellor Philip Hammond’s speech aimed to offer calm reassurance on the government’s economic record and fiscal responsibility while, barring any major shocks, hinting at a loosening of the purse strings in the autumn Budget.

There was always hope but little expectation that the government would move decisively to address pressing needs in adult and children’s social care which are pushing some councils perilously close to the cliff edge that Northamptonshire CC fell over last month.

Perhaps the biggest surprise was not included in the speech at all.

A list of the departmental allocations from £1.5bn available this year for Brexit preparations published this afternoon has raised eyebrows.

The Ministry for Housing, Communities & Local Government absence from the list was initially considered to be part of what appears to be an ongoing, collective denial among ministers of the perilous state of local government and the vital services it provides.

But a quick call to the Treasury revealed that all departments were invited to provide a “business case” for an allocation but the ministry failed to do so. It begs the question: why?

The vital role of councils in the run up to Brexit and beyond cannot be underestimated. They are best placed to assess and react to the needs of their communities by not only helping to build in economic resilience through appropriate housing, business development and infrastructure, but act to maintain cohesion and wider support in what are likely to be turbulent times. The case for increasing capacity in councils which will not only be on the frontline of efforts to meet the challenges faced by Brexit, but will also play a central role in preserving a social fabric that buffers against uncertainty, vulnerability and the perils of the unknown, appears undeniable.

The ministry has been asked by LGC to explain a decision that many will, on the face of it anyway, find hard to understand.

Over to you, secretary of state…

Despite being billed as the spring ‘stale-ment’, there was plenty in Mr Hammond’s half hour speech that will impact on local government.

A housing deal for the West Midlands was announced, for example, while the sector learned the next revaluation of business rates has been brought forward a year to 2021 with a view to carrying out further reviews every three years after that. As long as the revaluation does not happen at the same time as councils move to a system of 75% business rates retention and the methodology for carrying out the reviews is not altered that should not prove to be a major issue. Fingers crossed, anyway.

On the state of the nation’s finances Mr Hammond struck an upbeat tone. The country has reached “a turning point in the nation’s recovery from the financial crisis” and taken “another step on the road to rebuilding the public finances”, he said.

Going one step further Mr Hammond, who dubbed himself as being “positively Tigger-like”, said if public finances continue to improve he will have the “capacity to enable further increases in public spending and investment” at the next Budget.

That’s great but as Rob Whiteman, chief executive at the Chartered Institute of Public Finance & Accountancy, said that “will not satisfy those public bodies struggling right now”.

The National Audit Office last week warned that more councils could follow Northamptonshire CC and issue a section 114 notice based on current funding levels and spending patterns, which led to some to press the case for more cash ahead of today’s spring statement.

Those calls (once again) fell on deaf ears but while Mr Hammond offered a loose promise of jam tomorrow, there may be very few thriving public services left for the Treasury to finance in the future.

The economic forecasts might, as Mr Hammond said, indicate there is “light at the end of the tunnel”. But while the numbers might be looking a bit better than they have done in recent times on the Treasury’s spreadsheets, in the real world hard-pressed councils are staring into a very dark abyss.

By Jon Bunn, senior reporter, and David Paine, acting news editor

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