Commentary on the autumn Budget
READ ALL THIRTEEN LGC STORIES ON THE AUTUMN BUDGET HERE
In fairness, Philip Hammond had very little room for manoeuvre in setting today’s Budget.
However, local government has even less room for manoeuvre and its plight is getting ever more desperate.
(By way of balance it seems fair to point out that the chancellor’s plight, with the economy tanking and Brexiteers baying for his blood, is also desperate – but the wellbeing of millions of people does not depend on his political survival)
Mr Hammond got bad news out of the way first, or at least the bad news that he was prepared to deliver – more on the bad news that he didn’t deliver later in this Briefing.
“Regrettably our productivity performance continues to disappoint,” he said in his Budget speech. This meant the Office of Budget Responsibility today “revise down the outlook for productivity growth, business investment, and GDP growth across the forecast period”.
The upshot of this was explained by Institute of Fiscal Studies director Paul Johnson. The economy would be £65bn smaller in 2020 than was forecast in the March 2016 Budget; over the same timescale the budget surplus of £10bn forecast for 2019-20 has diminished to a deficit of £35bn.
“Quite a turnaround in less than two years,” noted Mr Johnson dryly.
This leaves little for public services. Local government is generally at the back of the queue for any giveaway but this year there was very little being given away to public services at all. Apart from the NHS, which appears to have got a £2.8bn one-off sticking plaster, lasting the next three years. Until the next one-off sticking plaster, of course.
NHS England chief executive Simon Stevens last year said that social care should be ahead of the health service in the queue for funding – but he is rewarded with even more money. Social care, in contrast gets nowt.
“Did I miss social care?” tweeted former NHS chief executive Sir David Nicholson.
“I must have missed the section on social care,” noted Sandwell MBC chief executive Jan Britton.
“No mention of social care. Wow,” tweeted Greater Manchester CA mayor Andy Burnham (Lab).
Mr Burnham was right. Search for “social care” in the Treasury’s green Budget book and not a single reference comes up.
There was no better news for cash-strapped children’s services departments.
Or public sector employees, whose wages have gone down and workloads up.
So are all the resources being directed towards the government’s priority area of housing?
Not exactly. The housing measures will make some headlines and there are big numbers in the Budget statement – just not sufficiently convincing numbers to give one confidence that a housing revolution is underway.
Councils will be able to borrow against their housing revenue account borrowing cap to build new houses. But not until 2019-20, only if they’re deemed to be in a “high demand area” and up to a total value of £1bn across the sector over three years.
Mr Hammond said the government will “monitor how authorities respond to this opportunity, and consider whether further action is needed.”
This didn’t necessarily suggest that the government believes that there is a crisis, a crisis that communities secretary Sajid Javid apparently believes necessitates the borrowing of £50bn to resolve.
Similarly, while the government has signed a housing deal with Oxfordshire’s councils, set to result in the building of 100,000 homes by 2031, other areas miss out. Housing deal negotiations continue with Greater London, the West Midland, Leeds and the West of England. “I’m ready to do further deals with ambitious councils!” tweeted Sajid Javid, who was clearly so excited that he deemed the announcement worthy of an exclamation mark.
Predictably, the chancellor’s tub-thumbing finale was not a boost to social housing but the announcement of the axing of stamp duty for first time buyers. This resulted in much excitement on his own party benches.
However, the Office for Budget Responsibility forecast that the inflationary effect of the measure would more than outweigh the impact of the removal of the tax.
“Post-[stamp duty land tax] prices paid by [first-time buyers] would actually be higher with the relief than without it,” it said. “Thus the main gainers from the policy are people who already own property, not the FTBs themselves.”
If people priced out of the housing market are not winners from the Budget, there is at least some mild relief for those facing the burden of the introduction of universal credit, whose waiting time is cut by a week.
Councils overall are served badly by the Budget – unless they have or are seeking a devolution deal, or are planning a big transport project.
A £1.7bn fund has been created for local transport projects. Meanwhile, the West Midlands CA gets a strengthened devolution deal (for which few details were immediately available), while Liverpool City Region and Tees Valley CAs are offered negotiations on stronger deals.
The biggest surprise was the announcement that the North of Tyne group of three councils will be getting a mayoral devolution deal. But this will involve them uncoupling themselves from the rest of the North East CA.
The deal for the three North of Tyne authorities does go some way to showing devolution is not dead. But it is someway short of the deal for the seven councils in the former North East grouping. Newcastle City Council and Gateshead MBC – two councils whose inspiring cooperation has brought mutual benefits – will take different paths, as will the more traditionally rival Geordies and Mackems.
Devolution may have a little life in it but far less than under George Osborne when it seemed inevitable that most of the north of England would have strong deals.
IPPR North director Ed Cox accused Mr Hammond, like his predecessor, of “behaving like Santa Clause with special prizes for well-behaved cities”. Far better to “become a modern democracy where cities and regions raise and spend their own tax revenues.”
If Newcastle leader Nick Forbes might be expected to be seen as the big local government winner of the Budget, wearing his Local Government Association Labour group leader hat, he started his response with: ““This Budget was a slap in the face for local government, and the millions of vulnerable people who rely on us.”
He was not alone.
“Local government needs certainty, stability and flexibility. Sadly, this Budget falls short, despite some positive measures,” said Jo Miller, president of the Society of Local Authority Chief Executives & Senior Managers.
“For local government, the Budget is most notable for what is missing from it: clarity on future funding arrangements. Councils cannot live hand to mouth. No business would be expected to run this way.”
Local Government Association chair Gary Porter (Con) was equally unenthused, stating: “It is hugely disappointing that the Budget offered nothing to ease the financial crisis facing local services.”
This was not a game-changing Budget for affordable housing or local public services. And it was not a game-changing Budget for this government’s fortunes.
Timidity will get Britain nowhere in an uncertain world.