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Letting go will reap long-term benefits

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The Budget is unlikely to make happy reading for local government.

The greatest concerns centre on whether the current arrangements, including the third year of the spending settlement, can be defended.

First and foremost, now is not the time for cutbacks. The upsurge in demand for safeguarding children services is fuelling pressure on already stretched budgets.

And the case for a Keynesianstyle public spending boost remains as compelling now as it was at the time of November’s pre-Budget report .

The Local Government Association today publishes sensible suggestions about how councils can keep the economic show on the road through the downturn.

There is a host of projects councils could implement rapidly, such as housing and road repairs, which would keep local firms afloat for a crucial few months. And good local authorities are able to respond in a swifter and more targeted way than the government can ever hope to achieve.

A German architect friend’s practice is working overtime at the moment on small-scale building projects, like home insulation, which have been financed by the Berlin government’s own counter-recessionary package.

Whitehall’s downturn-busting efforts do not yet appear to have made the same headway.

Centralisation is a difficult habit to break, judging by Lord Mandelson ’s recent slap in the face for moves to devolve Regional Development Agency funding to councils.

But the economic crisis makes the case for more devolution, not less. Central government is running out of money fast, as Alistair Darling is likely to confirm next week, with the result that councils will become more reliant on their own resources.

But for some councils, cutting business rates might be the right response, while others may need to increase their tax base to attract companies by boosting local infrastructure.

Councils will need much more leeway over how they raise and spend money in order to rebuild their local economies.

Last week’s Leader

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