All the news of interest to local government on Budget day
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17.20pm John Spence, chairman of the South East Local Enterprise Partnership, welcomed the additional funds for infrastructure but said it should be made available sooner. “The additional £3bn a year from 2015-16 for infrastructure will help support economic growth, he said. “There is plenty of opportunity for further investment in the south-east and we would have liked the funding sooner and to be available more quickly to support our aspirations for growth.”
17.16pm Caroline Haynes, director in KPMG Public Sector markets, says that although the government has backed Lord Heseltine’s recommendations on the single pot of funding, it would be better if it was available before 2015, the date currently planned.
“Of equal concern, it now looks as if the single pot will be significantly less than the £49billion outlined in Lord Heseltine’s report,” she says. “Of the six major areas of spend to be aggregated into the single pot, skills, housing and some transport funding will be included, but not welfare or business services funding. It is a huge pity because the faster we can tackle welfare and skills issues, the faster we can unleash growth.”
17.01pm The CBI has welcomed the rethink on cuts to capital spending, but expressed disappointment the chancellor had done nothing about business rates. Director general John Cridland said: “Conditions remain tough on the high street, so it is disappointing that the government has not capped the increase in business rates. A 2% cap would have really helped hard-pressed retailers.”
16.54pm Unison has reacted angrily to the government’s plan to bring forward the introduction of the single state pension scheme, describing it as a cash grab that could have serious implications for pension schemes in the public and private sectors.
Glyn Jenkins, the union’s head of pensions, said: “There is a real danger that the move could fuel deeper cuts to public services and jobs, as well be the final nail in the coffin for the few decent pension schemes surviving in the private sector. We are calling on the government to help employers and employees deal with the consequences.”
16.48pm LGC’s sister title Health Service Journal reveals the Department of Health is on course for its biggest annual underspend of the parliament – none of unused money is due to be carried over for use on other projects. (Story behind paywall)
@NickGolding tweets: “I forget if govt promise to increase NHS spending referred to allocating spending or actually spending the money.”
16.03pm Interesting point from Deloitte on the tax affairs of businesses bidding for public sector work. Government has rowed back from ban on companies that have avoided tax in past from being awarded government contracts. Kirsty Garrison, Infrastructure tax partner at Deloitte says:
“We have sympathy with the broad objectives of the policy but the initial draft focussed too much on the past and didn’t encourage good compliance for the future.
“We’re delighted to see that the retrospection has been alleviated, in that firms will only be banned in respect of returns filed from 1 October 2012 and amended from 1 April 2013. There is still scope for past tax planning which has since been unwound to bar now-compliant firms from government contracts, if their tax affairs are under enquiry and not yet been settled - but given that the proposed changes to government procurement were first announced in September, firms have been on notice since then. And the position going forward is clear – avoid tax, and run the risk of losing public sector work.”
15.53pm Reactions to the budget are pouring in.
Scott Dorling, a partner at law firm Trowers & Hamlins, said: “Many local authorities will be disappointed, but not surprised, that the housing debt cap has not been lifted for local housing authorities. The debt cap is a real barrier to more significant investment in social housing. Couple that with the new incentives for council tenants to buy their homes under the Right to Buy - reducing the qualifying period from 5 to 3 years and increasing the maximum discounts in London to £100,000 – and many local authorities will be wondering how they can address housing need in their area”.
15.32pm Andrew Shufflebotham, head of retail and consumer at law firm Addleshaw Goddard, said: “Given the current tough retail landscape, failure to address the delayed revaluation of business rates will not help the many retail tenants who are paying higher rates than rents in some locations, nor the major retail property landlords, such as those owning shopping centres in secondary locations, who are already suffering from far higher than usual vacancy levels”.
15.29pm Liz Peace, chief executive of the British Property Federation, has welcomed plans to consult on making it easier to change the use of land from agricultural and retail to residential use. “It’s crucial that the countryside remains a place of growth, industry and business rather than an enclave of the retired and wealthy”, she said.
15.25pm David Rogers (Lib Dem), chair of the LGA’s community wellbeing board, said the decision to bring forward the social care cap would be “welcome news” for many older and disabled people. However, he warned: “The original timetable of 2017 was already set to be extremely challenging, so it’s now vital that government provides clarity on a timetable for implementation and certainty that any costs associated with the proposed reforms will be fully funded”.
15.18pm Dr Jonathan Carr-West, chief executive of the thinktank Local Government Information Unit, says: “This is a budget that will be met with some relief by finance chiefs across the country. The secretary of state has protected local government from further cuts, although this may be tempered by January’s formula grant reduction next year. Many will also be unimpressed to see the commitment to the council tax deal remain at a time when councils need all the levers available to them.
“LGiU welcomes the Treasury’s commitment to growth and the lead role which councils will have via the Heseltine review. The announcement of additional money for housebuilding represents an important shift in emphasis that local government will particularly welcome. The National Planning Policy Framework, which aimed to free up the planning system, was based on the idea that local government was standing in the way of new homes. However, with 400,000 plots already approved for development, the real stumbling block is access to finance. It’s encouraging to see government recognise this”.
15.15pm Ravi Govindia (Con), leader of Wandsworth LBC and executive member for adult services at London Councils, said today’s confirmation that the social care cap would be brought forward to 2016 was “good news for Londoners currently worried about how to meet the high costs of care in the capital, either for themselves or family members”.
He said: “However, while the Dilnot Review offers security for those in need of care, it does not address how to fund that care.
“In London this is particularly acute. The capital has fewer homeowners, which means that supporting those who cannot pay towards the costs of their care falls to councils. Councils are working hard to meet current demands and making efficiency savings, but there is still a potential £907 million funding gap by 2018 in adult social care in London alone, which must be addressed.”
15.10pm LGA chair Sir Merrick Cockell says: “The prospect of new cuts to funding for local services in 2014/15 and beyond is extremely worrying. Reducing the money available for local services would be a false economy which diminishes those services, leads to higher costs in other parts of the public sector and limits the role councils can play in promoting growth.”
Sir Merrick urges the government to “reconsider its approach ahead of the 2015/16 spending round”. He says: “The only way of maintaining public services in the face of the proposed long-term cuts is by undertaking a radical transformation of the way they are provided and paid for. This has to be based on the idea of allowing local areas to design services around the needs of people and communities.”
He says the “most promising areas of the budget” are those that “offer local areas an enhanced role in promoting growth and delivering infrastructure”.
15.00pm We have some early stories up:
And Nick Golding looks at the main points of the Budget.
14.05pm John Wilkinson, managing director May Gurney Public Sector Services, says:
“While the announcement of more money for infrastructure is welcome as a driver for growth, it is critical that funds are translated as rapidly as possible into shovel-ready projects if this extra money is to create jobs and economic regeneration.
“Lord Heseltine called for Local Enterprise Partnerships to be used to allocate central funding and we applaud this initiative.
“Empowering local authorities to work with private investors and developers to manage these projects should speed-up delivery as councils already have the networks and management structure to deliver these growth plans. We urge the Government to push this infrastructure plan forward and get the UK building for growth.”
14.03pm National Housing Federation chief executive David Orr says:
“We welcome the Chancellor’s realisation that people around the country are struggling to buy their own homes, and the measures introduced today may help a number of them. But the danger is that if we don’t tackle the fact we’re still not building enough homes, we’ll just create another housing bubble that will continue to push house prices up and out of reach of the majority.
“And we still need the Government to help unlock land banks, free the small publicly owned derelict sites so we can build houses on them and give housing providers long-term certainty over how much income they can expect so they can start planning and building beyond 2015. With the impact of welfare reform still to be fully felt, we need reassurance and long-term commitment so we can play our part in raising the finance needed to build more homes.”
14.01pm Ian Fletcher, director of policy at the British Property Federation, said: “It’s encouraging the Government’s confidence in build to rent has been reciprocated and we are delighted to see that the equity funding was heavily oversubscribed. Working in partnership with Government the sector should deliver an exciting and quality array of homes for renters.”
13.43pm Brighton & Hove leader @jasonkitcat tweets:
Today’s budget is utterly depressing, nothing going in the right place & tax cuts for mega-corps.
13.29pm Tax cut for small firms aimed at increasing job creation.
Chancellor says ending of contracting out from state pension means National Insurance revenues and he will use that to create jobs and support the small businesses that creates them. Employing people is a burden to small firms so he has created the employment allowance, which will take £2000 off National Insurance bills of firms. Chancellor says 98% of this benefit will got to SMEs.
Will come into force in April and will also be available to charities and community sports bodies
13.28pm It’s a Budget for an aspirant nation, says Osborne. He’s sat down
13.21pm @hmtreasury tweets: “We will now scrap the beer duty escalator… And we’re taking a penny off a pint” #Budget2013
Councils will deal with the public health consequences.
13.20pm Tory backbencher @DouglasCarswell tweets: State backed “Mortgage guarantee”? Does Fannie Mae and Freddie Mac teach us nothing? Will push up house prices
13.19pm Osborne now hoarse, just like the nation’s food
13.18pm @ruthkeeling tweets: “yuck. who thought up that one. too too cheesy > “aspiration nation”“
13.17pm £3.5bn capital spend to shared equity loans for houses, says Osborne. Loans up to 20% of value of new build home to be loaned by government. New mortgage guarantee for lenders to support £130bn of mortgages from 2014, says Osborne.
13.15pm Ruth Keeling writes:
We’re bringing forward the introduction of the single tier state pension from 2017 to 2016, says chancellor.
This will cost public sector employers because the end of contracting out means employers and employees will have to pay higher national insurance contribution rates, he admits, but he says the spending review will take £3.3bn cost into account.
Public sector employees will pay more national insurance than they do now. But in return for paying same rate as rest of working population they will get a larger state pension
13.14pm @lgcplus tweets: “Public sector employers will have to absorb the burden” of today’s pension reforms, says Osborne #budget2013
13.12pm @edcox_ippr tweets: We may have low corporation tax but our FDI system is failing the North - see our report out this week
13.08pm @lgcplus tweets: Corporation tax will be cut to 20% in April 2015 - “lowest business tax of any major economy”, Osborne says #budget2013
13.07pm Ruth Keeling writes:
The move to extend pay restraint comes as local government unions argue with employers over pay rises for 2013-14. Although the employers matched the chancellor’s public sector pay limit of 1%, they did so on condition that a number of terms and conditions were changed.
13.06pm @CentreforCities tweets:
13.05pm Ruth Keeling writes:
This move on annually managed expenditure, which despite its name is the funding stream which is unlimited and reacts to demand for items such as benefits, follows a trend set by the reforms to council tax benefit. As a Department for Work & Pensions responsibility, this benefit was AME, but it has been transferred to councils as a departmental expenditure limit (DEL) which allows the government to cap the amount of money it will spend on the benefit.
13.04pm Evening Standard apologises for leaking Budget in tweet: http://order-order.com/2013/03/20/standard-accidently-leak-budget/
13.03pm Ruth Keeling writes:
Chancellor moves on to regional cities and the role they can play in economic growth – and he refers to his support for Lord Heseltine’s calls for a single pot for economic growth funding. The Treasury published its response on Monday, as LGC reported, although it did not accept all of Lord Heseltine’s recommendations in full.
13.01pm @lgcplus tweets: Osborne: £15bn in extra capital spending over the next decade; £3bn a year for infrastructure from 2015-16 #budget2013
13.01pm Osborne: I accept Michael Heseltine’s report on making the most of local enterprise. Details of single pot funding here: https://www.lgcplus.com/briefings/services/economic-development/osborne-backs-heseltine-review/5056268.article
13.00pm Capital expenditure was due to fall in 2015-16 and that is not sensible so we will add £3bn a year from 2015-16 and that will equal £15bn extra over next decade
12.59pm @CrispinDowler tweets: “Osborne ambushed by choking fit.”
12.58pm New limits to be placed on annually managed expenditure, in order to bring real control to areas of spending which have been out of control, says chancellor. Detail will come in spending review
12.58pm @lgcplus tweets:
There will be a new limit on annually managed expenditure, more details in next spending round, Osborne says #budget2013
12.57pm Ruth Keeling writes:
Chancellor also says he will tackle pay progression in the civil service – will be interesting to see if local government follows suit
12.56pm Further public sector pay restraint, limited to an average rise of 1% in 2015-16. Although the chancellor has no control over local government pay decisions, he says local government budgets will be adjusted accordingly. As will devolved administration budgets.
12.55pm £11bn cuts in 2015-16 but this will be decided in spending review – existing protections will apply and we will help departments find the savings, he says. Which suggests no reprieve for local government.
12.54pm Local government and devolved government budgets adjusted to assume one per cent pay rise, says Osborne.
12.53pm Ruth Keeling writes:
The traditional splurge of cash by departments at the end of the year has to be curtailed, chancellor says. Forecast underspend by £11bn this year
Reduce resource budgets by 1% for most departments Schools and health remain protected. Local government & police for 13-14 allocations have already been set out and they will not be affected, he says.
12.51pm One per cent spending reduction for most departments; health protected; local government unchanged from previous forecast.
12.51pm @McDonaldGraeme tweets: “Updated role for Bank of England. Inflation target of 2%, and potential intermediate threshold for interest rates.”
12.48pm Osborne: The measures I announce “are fiscally neutral overall” – indicating that tax cuts and capital spending are to come from departmental revenue budget cuts
12.48pm @lgcplus tweets: Proportion of national income spent by state will fall from 47.4% to 43.6%, says Osborne - “the government spends too much”
12.46pm Chancellor says he has had representations that would add £33bn to borrowing, but chancellor says that would pose a huge risk to the stability of the economy. “I will not take that gamble”
12.44pm @hmtreasury tweets: “Last yr domestic demand stronger than forecast but weakness of net trade that helps account for much of GDP weakness“
12.42pm A few stats compiled by Ruth Keeling from Osborne’s speech:
- Cut deficit by a third
- 1.25 million new jobs
- Interest rates at record lows
- Going to level with people…it is taking longer than anyone hoped but we must hold to the right track
- Today we go further on all three [strands] – monetary, fiscal, supply side reform
- Forecast from OBR reminds us of challenge at home & abroad… Eurozone “very fragile”
- 40% of exports go to Eurozone
- UK firms now export more to non EU than EU, first time in 2 decades, but we are still very vulnerable
- OBR forecast 0.6% growth.
- IMF forecast for UK to be higher than France & Germany
12.41pm When we started reducing public sector workforce some doubted private sector could pick up difference says Osborne. But for every job lost in public sector, six created in private sector.
12.40pm Growth faster than France and Germany, insists Osborne.
12.37pm @ruthkeeling tweets: “Pipe down you louts! You’ll get your turn.” Lot of jeering from the Labour benches.
12.36pm @bbcnickrobinson tweets: Bad news clearly coming as Chancellor says “I’m going to level with people”
12.33pm “Despite the progress we’ve made there’s much more to do,” says Osborne. “It’s taking longer than anyone helped but we must stick on the right track.”
12.33pm Osborne is on.
12.29pm Now just a few minutes until George Osborne begins his Budget speech.
12.27pm And here’s my leader article arguing that now is the time for Whitehall to allow others to implement fresh solutions to providing new jobs and growth.
12.24pm Meanwhile, Sir Merrick Cockell argued: Local government can help the government boost house building, infrastructure and economic growth, but it needs financial freedoms to do so.
12.21pm Here’s what chief executives and council leaders told us should be in the Budget. They urged an ease on restrictions that prevent investment in housing and infrastructure.
12.20pm Here’s LGC Insider’s take on the Budget and the impact on his council
12.17pm To see how Kettering BC chief executive David Cook believes George Osborne should help the country out of recession please click here.
12.12pm Our top Budget story so far: Lord Heseltine’s plea that ministers and top civil servants help drive his £49bn programme to boost economic growth in the regions has been ignored by the Treasury.
12.04pm Welcome to LGC’s live coverage of the Budget. There’s only 26 minutes until George Osborne stands. Here’s a few highlights from the day so far.
12.02pm @George_Osborne tweets: “Today I’ll present a Budget that tackles the economy’s problems head on helping those who want to work hard & get on.” He’s opened his new Twitter account today.
11.20am The Department for Work & Pensions have confirmed the new Single Tier State Pension will be implemented in 2016 instead of 2017. Pension actuaries Hymans Robertson warn the move to simplify the state pension is set to cost council employers and could wipe out savings produced by reform of the Local Government Pension Scheme.
9.00am Trails of the Budget suggest there will be further spending cuts for departments of 1% over the next two years, however the Financial Times reports there will be some “leniency” for local government, defence and police as well as the usual exemptions for education, health and overseas aid.