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Ministers should concede they are incapable of undertaking a full spending review

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Local government is stricken not just by its lack of resources but by the absence of certainty which prevents councils from planning ahead to mitigate austerity’s continuing ravages.

LGC hears repeated complaints that councils are unable to recruit officers long-term when it is unclear whether funding exists to retain them. Barnsley MBC chief executive Diana Terris explains in this issue how her council is having to look at “absolutely everything” with regards to possible cuts as it seeks to draw up a three-year spending plan, with little knowledge of what the coming years hold other than, presumably, a general sense of foreboding. She is not alone. Many use the phrase “cliff edge” in relation the funding of their authority from 2020-21 onwards; they crave some sort of certainty to enable them to devise a plan giving them a fighting chance to safeguard services.

Hopes are pinned on the spending review expected this autumn, at which the chancellor is due to set out the government’s departmental spending plans for (probably) the next three years. 

However, there is a double problem: ministers are not sufficiently engaging with the sector to appreciate its requirements while they simultaneously offer no indication of ability to implement any ensuing plan. Brexit is such a dominant issue that everything else is being neglected. Ministers have been too preoccupied with EU withdrawal to pay the attention required to demand for social care and children’s services to properly inform a major reappraisal of spending. The repeated delays to the social care green paper are totemic of a distracted minority administration unable to think ahead to anything other than Brexit.

It is fanciful to think that our national leaders are currently in any position to bind their departments to a spending plan resilient to whatever the next three years may bring, especially with the economic jolt of a no deal Brexit a strong possibility. Theresa May will surely leave Downing Street within the next year, most likely taking Philip Hammond with her. Their successors – potentially Jeremy Corbyn and John McDonnell, or the ones committed to giving the NHS £350m each week – will not necessarily be bound by anything decided this autumn.

Councils’ desire for certainty was illustrated when the vast majority signed up in 2016-17 to a four-year funding settlement. However, this was not all it was cracked up to be. While funding mechanisms such as revenue support grant were fixed, others like the better care fund and public health grant were not. The government’s eradication of negative revenue support grant (welcome though it was for affected councils) undermined the concept of a longer-term settlement. It is hard to plan ahead if you only have certainty over part of your budget but everything else is variable; budgets are so tight that small changes have big impacts.

The paucity of long-term thinking was illustrated this month by the stronger towns fund, worth just £1.6bn over six years, and supposedly intended to bridge the gap between the haves and the have nots. It is unclear that ministers know how this relates to the shared prosperity fund supposed to replace EU funding and the amount in question is a drop in the ocean with regards to fulfilling what should be among the government’s biggest priorities.

It is hard to believe any spending review undertaken in the current climate could fairly evaluate the needs of local government and the public sector more broadly, while Brexit surely makes any projections of government revenue and borrowing unreliable. The spending review is going to offer none of the long-term assessment of national priorities councils so desperately require so we should not get our hopes up it will provide much relief. Rather than lead councils up the garden path with false promises of stability the government should concede that it is in no position to plan ahead and stick to a one-year settlement.

LGC has been told by one expert that Whitehall mood music indicates the spending review’s scope could be diminished to a covering single year, and that the potential exists for only certain parts of public spending to be covered by it. Local government and the nation more broadly require a government to make long-term spending plans – but the current administration simply is not up to the job of doing this in 2019.

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