The CSR: by practice area

October 20, 2010

The Chancellor of the Exchequer, George Osborne, unveiled the Comprehensive Spending Review today. Philip Hoult, Editor of Local Government Lawyer, selects some of the key outcomes for local authorities and related public sector organisations – and the lawyers who advise them.

Overall

The government says the review involves “a settlement for local government that increases local authorities’ freedom to manage their budgets, but will require tough choices on how services are delivered within reduced allocations”
Local government grant funding will be cut by 26%. Councils are to see a 7.1% annual fall in budgets
There was confirmation that there will be an estimated 490,000 job losses in the public sector
The Spending Review is said to be underpinned by “a radical programme of public service reform, changing the way services are delivered by redistributing power away from central government and enabling sustainable, long term improvements in services”
Localisation of power and funding will be achieved by, amongst other things, removing the vast majority of ring-fencing around resources to local authorities and extending the use of personal budgets for service users
There will also be increasing diversity of provision in public services “through further use of payment by results, removing barriers to greater independent provision, and supporting communities, citizens and volunteers to play a bigger role in shaping and providing services”

Adult social services

The Spending Review “makes available sufficient resources for local authorities so that they do not need to reduce access to services, and can fund new approaches that improve outcomes for those receiving social care”
The current Department of Health grant to local authorities for social care, the Personal Social Services Grant, will increase by £1bn in real terms by 2014/15. “To reduce administrative burdens and increase flexibility for local authorities, this grant will be merged into local government formula grant”
The NHS is to set aside funding growing to £1bn by 2014/15 to fund new ways of providing services, including reablement services provided by the NHS. “This will help to break down the long-standing barriers between health and social care”
The government is to look at setting proportions of appropriate services across the public sector that should be delivered by independent providers, such as the voluntary and community sectors and social and private enterprises. “This approach will be explored in adult social care, early years, community health services, pathology services, youth services, court and tribunal services and early intervention for the neediest families”
The government is to take forward proposals to invest in mental health liaison services at police stations and courts to intervene at an early stage, diverting mentally ill offenders away from the justice system and into treatment
There will be fundamental reforms to simplify the welfare system, “promoting work and personal responsibility through the new Universal Credit as well as providing enhanced support for those with the greatest barriers to employment through the Work Programme”

Children’s services

There will be real terms increases of 0.1% in each year of the Spending Review for the 5 to 16s school budget
A new fairness premium worth £7.2bn in total over the Spending Review period will be introduced to support the poorest. This includes an extension from 2012/13 to 15 hours per week of free early education and care to all disadvantaged two-year-old children, and a new premium worth £2.5bn targeted on the educational development of disadvantaged pupils
The Department for Education will have £15.8bn of capital funding over the Spending Review period. The government will rebuild or refurbish more than 600 schools through the Building Schools for the Future and Academies programme. “The decision to end BSF will allow new capital to be focused on meeting demographic pressures and addressing maintenance needs”
The government is to look at setting proportions of appropriate services across the public sector that should be delivered by independent providers, such as the voluntary and community sectors and social and private enterprises. “This approach will be explored in adult social care, early years, community health services, pathology services, youth services, court and tribunal services and early intervention for the neediest families”

Community Safety

Police resource funding will be reduced by 14% in real terms by 2014/15
The effectiveness of frontline policing is to be protected “by reviewing terms and conditions of service, and making efficiencies in IT, procurement and the back office to deliver savings”
The introduction of directly elected police and crime commissioners will “ensure that police forces focus their resource on tackling the crime and anti-social behaviour which matters most to local communities”
There will be a 13% real terms reduction to fire resource expenditure. “This will require the Fire and Rescue Service to modernise, increase efficiency and deliver workforce reform”
Councils and their partners will have greater flexibility to work across boundaries in health, policing, worklessness and child poverty
The government plans to reform the sentencing framework “so that it both punishes the guilty and rehabilitates offenders more effectively”. Proposals will include the use of tough community penalties where they are more effective than short prison sentences; using restorative justice; and paying private and voluntary providers by results for delivering reductions in reoffending.

Employment

The estimated number of public sector job losses was confirmed at 490,000
The state pension age will increase from 65 to 66 in 2020
The findings of the interim Hutton report on public service pensions have been accepted. “The government will commit to continue with a form of defined benefit pension, and seek progressive changes to the level of employee contributions that will deliver an additional £1.8 billion of savings a year by 2014-15. The nature of the benefit and the precise level of progressive contributions will be determined once Lord Hutton’s final recommendations have been received”
Public service workers will have new rights to form cooperatives

Governance and risk

Local authorities are to be given a “universal power of competence” (note: there appears to be no detail in the Spending Review on whether this differs from a “general power of competence”)
The government has promised significant devolution of financial control to councils, “by removing ring-fencing around all revenue grants except simplified schools grants and a new public health grant, the number of separate core grants simplified from over 90 to fewer than 10, and more than £4bn of grants rolled into formula grant”
There will be funding in all four years of the Spending Review to enable local authorities to freeze their council tax in 2011/12
The “important” flexibility of prudential borrowing is retained, “with a forecast that total capital expenditure by local authorities will fall by 30% by 2014/15”
The government has selected the first community budgets in 16 local areas, to pool departmental budgets for families with complex needs, from 2011/12. “These will pool departmental budgets for local public service partnerships to work together more effectively, help improve outcomes, and reduce duplication and waste”. All places may be able to operate these approaches from 2013/14
Councils and their partners will have greater flexibility to work across boundaries in health, policing, worklessness and child poverty
The government will reduce spending on council tax benefit by 10% and localise it from 2013/14 while protecting the most vulnerable. “In addition, the government will consider providing greater flexibilities to local authorities to manage pressures on council tax from the same date”
£200m is to be made available to councils in 2011/12 to accelerate reforms of local services
There will be, as already announced, an end to the previous top-down performance framework for councils. Local authorities and partners will be able to cease reporting any of the 4,700 local area agreement targets
Funding will be made available to support the Big Society including pilots for National Citizen Service
A £100m transition fund will be set up to support those voluntary and community sector organisations most affected in the short-term by public spending reductions

Healthcare

There will be real terms increases in overall NHS funding in each year to meet the government’s commitment on health spending, with total spending growing by 0.4% over the Spending Review period
There will be an additional £1bn a year for social care through the NHS, as part of an overall £2bn a year of additional funding to support social care by 2014/15
The government has promised continuing funding for priority hospital schemes
Reforms to NHS already announced include: GPs being given power to commission patient care; abolition of PCTs and SHAs by 2013; ring-fencing of public health funding with a premium for tackling pockets of ill health and reducing health inequalities; encouragement of greater diversity and efficiency of providers, with patients able to use independent providers paid for by the NHS
Councils and their partners will have greater flexibility to work across boundaries in health and child poverty

Housing

Social housing is to be made “more responsive, flexible and fair”. Social landlords will be able to offer a growing proportion of new social tenants new intermediate rental contracts that are more flexible, at rent levels between current market and social rents. The terms of existing social tenancies and their rent levels are to remain unchanged
The council housing financing system will be reformed “so local authorities have greater control over their own finances, and can reinvest to meet local housing need”
Investment via the Decent Homes programme “will continue to improve the existing social housing stock”
There will be continuing, “but more modest”, capital investment in social housing. Building of new social housing is to be cut by 74%
The government insisted that its changes would allow the government to deliver up to 150,000 new affordable homes over the Spending Review period
A New Homes Bonus is to be introduced to directly reward and incentivise local authorities and local communities to be supportive of housing growth, “equivalent to matching the additional council tax from every new home for each of the following six years”. The total regulatory burden on the house building industry is to be reduced
There will be provision for the disabled facilities grant to rise with inflation. Reform of council housing finance system will “build in the resources needed to carry out future disabled housing adaptations required in the council housing stock”

Litigation and enforcement

The sentencing framework will be reformed “so that it both punishes the guilty and rehabilitates offenders more effectively”. Proposals will include the use of tough community penalties where they are more effective than short prison sentences; using restorative justice; and paying private and voluntary providers by results for delivering reductions in reoffending
The government is to take forward proposals to invest in mental health liaison services at police stations and courts to intervene at an early stage, diverting mentally ill offenders away from the justice system and into treatment
The government is already consulting on the closure of 157 “under-utilised” courts, and “will reform the court system to provide a more efficient service, using mediation and alternatives to court where possible”. Court is to be seen as the last resort rather than the default option
The Ministry of Justice budget will be reduced to £7bn by 2014/15. The department will reduce its back office and administration costs by 33%. Capital investment is to be focused on essential maintenance and on projects that produce sustainable savings. New IT and court projects are to be limited to essential capacity
The government to consult on major reforms to the legal aid system to deliver access to justice at lower cost to the taxpayer. “This will involve taking tough choices about the types of cases that should receive public funding, and focusing on support on those who need it most”. Reforms will increase competition in the market and reform remuneration for providers
The government will look at setting proportions of appropriate services across the public sector that should be delivered by independent providers, such as the voluntary and community sectors and social and private enterprises. “This approach will be explored in adult social care, early years, community health services, pathology services, youth services, court and tribunal services and early intervention for the neediest families”

Planning

The government will increase housing supply by reforming the planning system so that it is more efficient, effective and supportive of economic development
A New Homes Bonus is to be introduced to directly reward and incentivise local authorities and local communities to be supportive of housing growth, “equivalent to matching the additional council tax from every new home for each of the following six years”. The total regulatory burden on the house building industry to be reduced
Further detail on tax increment financing and the future incentives and planning powers open to local authorities to support growth will be provided in a White Paper on local growth later this year
The Localism Bill will ensure that the planning system both works for sustainable growth and is responsive to the needs of local communities. “As part of these wider reforms, there will be a new presumption in favour of sustainable development”
The CRC Energy Efficiency scheme will be simplified. The first allowance sales for 2011/12 emissions will take place in 2012 rather than 2011. Revenues from sales totalling £1bn a year by 2014/15 will be used to support the public finances, including spending on the environment, rather than recycled to participants
There will be £1bn of funding to capitalise a UK-wide Green Investment Bank
The government has promised continued investment in flood and coastal erosion risk management, with £2bn spent during the Spending Review period.

Procurement

The Cabinet Office will continue to work with the Treasury to drive improvement, cost savings and innovation across government through the Efficiency and Reform Group
The government will pay and tender for more services by results rather than be the default provider, look to set proportions of specific services that should be delivered by non-state providers including voluntary groups; and introduce new rights for communities to run services, own assets and for public service workers to form cooperatives
The approach of setting proportions of appropriate services to be delivered by independent providers “will be explored in adult social care, early years, community health services, pathology services, youth services, court and tribunal services and early intervention for the neediest families”
Communities will be given due notice and the right to buy or run public assets and services that might otherwise close or face significant reductions
The Office for Civil Society has been funded to provide support for the Big Society, which will include “encouraging volunteering, building the capacity of the voluntary and community sector, establishing community organisers and setting up a Community First Fund to support local and community organisations”. The Cabinet Office has been funded to pilot the National Citizen Service
The effectiveness of frontline policing is to be protected “by reviewing terms and conditions of service, and making efficiencies in IT, procurement and the back office to deliver savings”
Central government is to use its scale as effectively as possible in common areas of spending such as procurement, property and major contracts – addressing the findings of Sir Philip Green’s Review
In some areas, the government’s approach to efficiency will be to mandate a single central process. In others departments will have to follow a specific set of steps or go through a tighter approval process.
Key measures include: central mandation of commodity procurement, with centrally negotiated deals “available to local government as well”; stronger scrutiny processes for major projects to assure they will deliver on time and to budget; making better use of experts across Whitehall; and a more coordinated approach to supplier management to ensure government acts as a single client with key suppliers

Projects

Further detail on tax increment financing and the future incentives and planning powers open to local authorities to support growth to be provided in a White Paper on local growth later this year.
The £1.4bn Regional Growth Fund will support projects with significant potential for private sector economic growth and employment, supporting those areas and communities that are currently too dependent on the public sector. The White Paper on local enterprise partnerships will be published shortly
The government will rebuild or refurbish more than 600 schools through the BSF and Academies programme. “The decision to end BSF will allow new capital to be focused on meeting demographic pressures and addressing maintenance needs”
There is to be protection for high-value transport maintenance and investment, including over £10bn over the Spending Review period on road, regional and local transport schemes, including construction of the Mersey Gateway bridge; £14bn for Network Rail, including major improvements to the East and West Coast Main Lines; £6bn for upgrades and capital maintenance on the London Underground network; and funding to enable Crossrail to go ahead
The government’s intention is to proceed with PFI projects “that will deliver sustained improvements in highways maintenance in Sheffield, Hounslow and the Isle of Wight and extend the Nottingham tram network with two new lines”. The government will be urgently working with the four local authorities to establish how these projects can be delivered affordably

Property and assets

Communities will be given due notice and the right to buy or run public assets and services that might otherwise close or face significant reductions
Further detail on tax increment financing and the future incentives and planning powers open to local authorities to support growth to be provided in a White Paper on local growth later this year
There will be a new system of national property controls across the central civil and operational estate. “The government believes there could be substantial gains to be made from a more coordinated approach to property asset management in the public sector.” The Government Property Unit has been established and will as a first step set up property vehicles for the Central London and Bristol office estate from 2011/12
The government will continue to look into the potential sale of public sector assets, including property holdings, “which could operate more sensibly and efficiently in, and with the private sector”

Transport

There will be protection for “high-value transport maintenance and investment”, including over £10bn over the Spending Review period on road, regional and local transport schemes, including work on the A11, M4/M5, M1, Midland Metro, Tyne and Wear Metro and construction of the Mersey Gateway
Other funding in the Department for Transport’s settlement: £14bn for Network Rail, including major improvements to the East and West Coast Main Lines; £6bn for upgrades and capital maintenance on the London Underground network; and funding to enable Crossrail to go ahead
The government’s intention is to proceed with PFI projects “that will deliver sustained improvements in highways maintenance in Sheffield, Hounslow and the Isle of Wight and extend the Nottingham tram network with two new lines”. The government will be urgently working with the four local authorities to establish how these projects can be delivered affordably
There will be protection of the statutory entitlement for concessionary bus travel
Bus subsidies paid directly to operators are to be reduced by 20% to save £300m by 2014/15. “The government will also work with bus operators and local government to examine smarter ways of administering this subsidy”
Local government resource grants are to be cut by 28%. The government will simplify the number of grants “to give local authorities more control and greater flexibility in how they spend this money”