BUDGET 2013: THE REACTION

Find out the reaction of the Local Government Association, the Chartered Institute of Housing, the Royal Town Planning Institute and others to this year's Budget.

Sir Merrick Cockell, Chairman of the Local Government Association

“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.

“Councils are already dealing with a 33% cut in funding from central government. This has led to reductions in local services. Any new cuts next year and beyond will have a significant negative impact, particularly as the rising cost of services such as adult social care and changes to National Insurance are already guaranteed to soak up an increasing share of local government funds.

“The Government needs to reconsider its approach ahead of the 2015/16 spending round. 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. The extension of the Community Budgets programme to make it available to other local areas is a major step. Councils can help deliver such a programme and have a central role in deciding how funding should be spent at the local level. Transformation is already happening in local government and it now needs to be matched across the entire public sector.

“The most promising elements of the budget offer local areas an enhanced role in promoting growth and delivering infrastructure. It’s vitally important for the economy that the positive changes signalled today are backed by the necessary money and aren’t cancelled out by new reductions to local government funding. The proposals won’t be viable unless the budgets are properly devolved. Councils have a lead role on this work and it is essential that they are given oversight to ensure projects are carried forward and that money is spent in an effective, transparent and democratically accountable way.”

Grainia Long, chief executive of the Chartered Institute of Housing

“The significant support for home ownership and construction through Help to Buy and the mortgage guarantee scheme is welcome recognition of the central role housing can play in powering our economic recovery. Thousands of people have been locked out of home ownership by spiralling prices and these schemes will help to address that.

“However, government will need to monitor the impact of these policies carefully to ensure that they are increasing new house building rather than simply stoking up house prices.

“We are disappointed that the Chancellor has missed the opportunity to lift local authority borrowing caps so they can invest more in developing new homes. This move would release nearly £10bn of investment over five years, to build 15,000 homes a year, supporting 23,500 jobs a year and adding £5.6bn to our economy per year. CIH will continue to press for borrowing caps to be lifted. We believe that with house building at its lowest level since the Second World War the government needs to invest directly in new homes on a bigger scale.

“We are pleased that the government has listened to CIH’s call to provide certainty for social rents beyond 2015. This will give landlords the confidence to invest for the future by enabling them to secure around £3bn a year of new private finance to invest in the continued supply of new homes.

“Increasing access to Right to Buy is good news for the people who will benefit and local authorities may receive more money to invest in new homes. But it’s still not clear whether the homes that are being bought under this scheme will be replaced on a one-for-one basis, as the government promised they would be. If they are not then the number of affordable homes available for social rent will be reduced, and that’s not good news for anyone.”

Trudi Elliott, chief executive of the Royal Town Planning Institute

"We asked for greater certainty on policy. The Government will be producing technical guidance on shale gas, taking forward the Taylor Review recommendations and aligning planning with other regulatory regimes. These are welcome steps in principle and we will be examining the proposals carefully to ensure that they result in a more effective planning system.

“The Chancellor also indicated that areas will be asked put in pro-growth planning policies and delivery arrangements as part of Local Growth Deals and City Deals. We asked for greater freedoms and flexibilities for pro-growth councils, particularly in respect of fee setting and we hope that councils take the opportunity to push for this in their negotiations with Government. We stress that strategic economic planning needs to be consistent with the joint strategic planning for housing to be carried out by local authorities.

“We also encouraged the Chancellor to put the weight of the Treasury behind the Map for England initiative and for greater joined up government. We will continue to press Government on these points.

“Whilst we welcome increased infrastructure spending in the medium-term, we are disappointed that there is no new funding for infrastructure now."

Scott Dorling, partner at Trowers & Hamlins

“Many local authorities will be disappointed, but not surprised, that the housing debt cap has not been lifted for local housing authorities. Various bodies had called for the lifting of the debt cap in order to pave the way for ambitious programmes of new social housing delivery.

“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 five to three 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.”

David Orr, chief executive of the National Housing Federation

“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.

“Our housing market has long been weakened by the lack of new houses being built, which are forcing up rental and house prices – leaving millions of people struggling to get on the property ladder or pay their rent. The Government should be focusing on unlocking investment to build more new homes as a way of managing down the housing benefit bill and boosting the economy. We welcome the measures to support new supply but they are very small scale.

“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.”

Caroline Haynes, director in KPMG Public Sector markets

“Further squeezes to departmental budgets in the next two years will heap more pressure on government. Despite the commitments made to ring-fence key areas it appears that only defence, transport and NHS remain completely unscathed, but the government hinted that further welfare squeezes may be on the horizon.


“In addition, by introducing a spending framework that caps annual managed expenditure (AME) spending, prioritisations between different AME recipients will have to be made. However, we will need to see the detail to understand the details of how this will work.


“In order of magnitude it looks as if the communities and local government budget, education, DWP and Home Office now need to find new ways to reduce costs in 2013/14 and 2014/15. As all these departments have significant reform programmes underway, doing so will be a huge challenge.


“The answer lies in accelerating the reform agenda. We hope the tax incentives that were put in place to encourage employee spin-outs will kick-start the government spin-out revolution. “