Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Is austerity over for local government? Don’t bet on it. Literally

  • Comment

LGC’s essential daily briefing.

On the face of it this was a Budget that, if not providing cheer, certainly did not deliver the level of doom and gloom to which local government has become accustomed.

An extra £650m for struggling care services was surely more than what many councils would have dreamed possible only a few weeks ago, especially after just being given £240m at the start of the month.

Yes, it’s a short-term fix that falls short of the gaping gap in social care but, if nothing else, it shows the sector’s arguments are cutting through to ministers and senior civil servants.

Again, while £420m for highways repairs will hardly begin to fill the metaphorically massive pothole across the road network, it is better than what councils have been getting for most of this decade.

Setting aside the fundamental fact the sector still awaits sustainable long-term solutions to its funding crisis, the Budget really was, as had been predicted by Chartered Institute of Public Finance & Accountancy chief executive Rob Whiteman, “more helpful” than people had been expecting. There may have been sticking plasters aplenty, but at least there’s the potential for putting them together to form a bigger bandage. 

It’s a little over 24 hours since the chancellor sat down after delivering his Budget speech and, to be fair to him, especially given the current political climate, the wheels have not completely come off. Well, there’s been no major post-Budget fallout like that of the infamous pasty tax of 2012 anyway. Ah, those were the (more innocent) days…

The real benchmark for a Budget though has, in recent years, been whether it passes muster with the eagle-eyed analysts at the Institute for Fiscal Studies.

The fact the general tone of the institute’s analysis was indifferent is likely to be perceived as a big result by onlookers from Whitehall (and there were plenty of representatives from the Treasury, Department for Work & Pensions, Department of Health & Social Care, to name a few, in attendance at today’s briefing).

IFS director Paul Johnson pointed to a “considerable easing in spending control and a change of fiscal direction” – day-to-day spending on public services is due to rise by about 8% between now and 2023-23. However, this is largely a result of the £20bn investment in the NHS and Mr Johnson warned there will be “no bonanza” for unprotected departments (i.e. not the NHS, defence, or aid).

While the Budget red book shows the Ministry of Housing, Communities & Local Government is set to see a £900m increase in its resources budget to £8.2bn for 2019-20 (and a £1.3bn increase to £10.8bn on its capital budget), the IFS warned that any departmental increases next year are likely to be followed by cuts thereafter due to the NHS spending commitments.

Also, the IFS pointed out, the amount spent generally on ‘unprotected departments’ is still set to fall in per capita terms and as a share of national income.

Writing for LGC immediately after the Budget yesterday, New Local Government Network director Adam Lent said: “The real action, if there is to be any, will come with next year’s spending review.”

Further details on the spending review’s total envelope were conspicuous by their absence from the documents published alongside the Budget. But with the chancellor nailing his colours to the mast (or having himself been nailed to the mast, more like) in terms of the £20bn commitment to the NHS by 2023, it’s perhaps not looking that good for local government after all.

In his pre-Budget prediction, Mr Whiteman also feared the spending review could be “worse than predicted” for the sector. Councils will be hoping that on this point he is wrong. The prospect does not look good, however, as Mr Johnson attested.

“Many public services are going to feel squeezed for some time to come,” said Mr Johnson. “Cuts are not about to be reversed.

“If I were a prison governor, a local authority chief executive or a headteacher I would struggle to find much to celebrate. I would be preparing for more difficult years ahead.”

Then there’s Brexit to consider.

“The chancellor was clear in his speech that if the prime minister secures a good deal on Brexit and gets it through Parliament, then he fully expects a sudden boost to growth, which would generate lots of tax receipts and thus much more generous planning around the review,” wrote Mr Lent.

“So, councils and the people they serve are now reliant on the vagaries of the negotiations happening in stuffy rooms in Brussels and, somewhat more worryingly, the tactical manoeuvrings of Jacob Rees-Mogg and Boris Johnson.”

Mr Johnson - Paul, that is - warned that if there is no Brexit deal or one that is worse-than-predicted then the improved projections for public finances are likely to go “in the other direction”.

While Mr Johnson said that was unlikely to result in the government reneging on its general spending commitments, he warned there was likely to be “further fiscal consolidation required” in the long-run – i.e. another round of austerity.

One of the major questions arising from this Budget is whether austerity really is over. As the IFS concluded, it depends on your definition. 

Is austerity over local government? I wouldn’t bet on it, mostly because you will almost certainly need every penny and pound you can get your hands on in the years to come.

By David Paine, acting news editor

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.