The UK is now on a path to cut public expenditure to 36% of gross domestic product. Table 4.15 of the Office for Budget Responsibility’s March 2015 Fiscal Outlook shows total managed expenditure dropping from 40.7 to 36% between 2013-14 and 2018-19. Apart from a single year (2000-01) at the start of the Blair government, this will be the lowest share since the late 1950s.
The general election saw the Conservatives and other parties committing themselves to finding additional resources for the NHS and pensions. International development and schools are also protected.
As during the last parliament, unprotected services such as defence, the police, transport, housing and local government will have to be cut deeply in order to achieve a zero deficit. Moreover, tax cuts are now promised.
The chancellor will soon produce detailed spending plans for the next three or four years. For local authorities, the future will look very like the recent past.
Revenue spending fell by about a quarter between 2009-10 and 2014-15, though more in cities. This scale of reduction will have to be repeated between 2014-15 and 2018-19.
If the pattern of the coalition years is a guide, the cuts will be front-loaded. The years 2016-17 and 2017-18 are likely to see the sharpest reductions. Local government collectively needs to signal what kind of service changes this will require. Expectations will need to be managed if the public is to accept the scale of change.
Social care must be vulnerable. Councils will find it hard to protect services for children and older people in the way they have, largely, up until now. There must be a possibility that either funding will be ringfenced or that care will be handed over to the NHS. Alternatively, and the government’s Greater Manchester health proposals are interesting here; it is just possible the NHS could be transferred to city and county regions.
The appointment of Greg Clark as communities secretary is a peace offering to local government. This being said, the spending policy he will have to sell will be no more palatable than that of his predecessor. But one thing is for sure, he will do it differently.
Tony Travers, director, Greater London Group, London School of Economics