Autumn Budget and Spending Review 2021: reaction from the sector

Local Government Lawyer rounds up reaction from the sector to the Autumn Budget and Spending Review 2021.

For a summary of some of the main announcements, go to Autumn Budget and Spending Review 2021: key policy measures.

Cllr James Jamieson, Chairman of the Local Government Association

“We are pleased that today’s Spending Review has provided new government grant funding for councils over the next three years to support vital local services. This will help meet some – but not all - of the extra cost and demand pressures they face just to provide services at today’s levels.

“Capital investment in skills, transport, housebuilding, and the provision of school places for children with special educational needs and disabilities (SEND) announced today are positive. It is also good that the Government will provide additional funding to help councils continue their ongoing efforts to support people at risk of rough sleeping and homelessness and to fix potholes and improve our local roads.

“It is disappointing that the Chancellor has not provided additional funding to address existing pressures on adult social care services and not increased public health funding. We remain concerned that the money allocated to social care from the Health and Care Levy will be insufficient to fund reforms. The potential rise in local government core spending power over the next three years will also be dependent on councils increasing council tax by 3 per cent per annum.

“Investing in local places is one of the most powerful tools of the Government’s levelling up agenda. With adequate long-term resources and freedoms, councils can deliver world-class local services for our communities, tackle the climate emergency, and ensure all parts of the country are able to prosper in the future.

“We continue to analyse the detail of today’s announcements. Councils will be looking for clarity and certainty over the future of local government funding reforms and that this three-year Spending Review is reflected in a three-year settlement for local government.”

Cllr Sam Chapman-Allen, Chair of the District Councils Network

“The Spending Review does not deliver the firm financial foundation district councils need to continue delivering essential frontline services and supporting local economies to grow. We cannot see how the £4.8 billion new grant funding announced by the Chancellor will come close to addressing the financial pressures district councils and the rest of local government are under.

“Councils face a triple whammy of rising inflation, higher wage costs from the lifting of the public sector pay freeze and continuing pressures from the impact of Covid.

“This leaves councils with an unpalatable choice between increasing council tax for hard-pressed local residents or cutting services that every local resident and business relies on.

“The last 18 months have been exceptionally challenging for local businesses and district councils across the country have stepped up to support them. We welcome the business rates reforms which will provide stronger incentives for local businesses to grow. And we’re pleased that the Government has committed to compensate local councils fully for the impact of these changes. We call on the Government to work closely with us to implement these changes as efficiently as possible.”

Cllr Georgia Gould, Chair of London Councils

“Today we’ve seen some recognition of the vital role that local services play in our communities but we urgently need more resources.

“Boroughs have proved themselves crucial in the response to Covid-19 and are determined to secure a post-pandemic recovery that drives green growth and tackles inequalities in the capital. London is a dynamic, successful city but also a place of immense challenges – including the highest unemployment, homelessness, and relative poverty rates in the UK.

“However, the announced funding increases aren’t enough to meet the huge challenges facing our communities. In particular, there remains great uncertainty over adult social care, which is the largest area of council spending and supports some of our most vulnerable residents. We’re also deeply concerned that London is missing out on a fair share of levelling up support."

Jonathan Carr-West, Chief Executive of the LGIU thinktank

“The Chancellor’s budget proved more generous than expected for many. Local government will be pleased that a key sector demand has been listened to as we finally have a multi-year settlement that allows for better long-term planning for councils.

“Grant increases of £1.6bn per year for the next three years and a 3% increase in core spending power, do not undo a decade of cuts but they are a step in the right direction. However, we should never forget that this 3% increase depends on councils taking the political risk of increasing council tax to the maximum permitted extent.

“Social care costs will continue to rise, especially given the announcement of an increase in the minimum wage. That will eat into most, if not all, of a 3% increase in spending power. And, it’s still far from clear when the benefit of national insurance contribution increases will be felt across social care.

“The wait continues for the Government’s much anticipated Levelling Up White Paper. And, for those who believe that levelling up can only succeed in partnership with local government, there was little grounds for optimism in this budget which continues to be allocated through bid funding and regional and sub regional authorities getting the largest chunks of it.

“After over a decade of austerity, local government has learned to take nothing for granted and to read the small print very carefully. Nonetheless, a sector that was braced for more pain will be feeling this afternoon that things could have been worse.”

Jonathan Werran, chief executive of thinktank Localis

“The initial take on the Chancellor’s statement has to lead with the unexpectedly large increase in day-to-day revenue expenditure, an increase of £150bn to departmental budgets over parliament.

“For local government, the work starts now in poring over the Treasury Red Book and supporting documents to see what a 3.8% real terms increase might translate to in future local government financial settlements, in an environment of increased staff wages and rising national insurance costs.

“In particular, after the lost decade of the 2010s, officers will be examining how this new money affects the trajectory of council spending power over the next decade for the delivery of popular, everyday public services from bin collection and road maintenance and what this means for locally-funding adult's and children’s social care.

“If ‘levelling up’ runs as a golden thread through the Exchequer’s strategic public finance settlement, there will be a need to unpick locally the individual strands from the likes of the £1.7bn Levelling Up Fund and UK Shared Prosperity Fund to see how much cloth there is to be cut to restore pride in the places people call home.”

Rory Stracey, planning partner at Trowers & Hamlins

"In allocating £1.8bn for building around 160,000 new homes on derelict or unused land the Government continues to prioritise new housing within existing urban areas, avoiding incursion into greenbelt or greenfield land. The allocation of funds for 'pocket parks' in urban areas also highlights the emphasis of redeveloping and regenerating urban areas.

“The Government has also indicated that it wishes to pursue the idea of digitising the planning system. Critics will query whether investing in an expensive IT system is money well spent at a time when local planning authority budgets and stretched and struggling to cope with their planning application caseloads."

The National Housing Federation

"Today’s budget is a welcome commitment of support in key areas, after a year that has seen families across the country struggling to afford the cost of living.

"Levelling up is a priority for housing associations, who are ready to play their part in tackling local inequalities and helping communities up and down the country to thrive. The additional £1.8bn for brownfield regeneration is welcome news, alongside last week’s confirmation of the next wave of Social Housing Decarbonisation Fund, which represents an important step toward reaching our net zero ambitions.

"While it won’t mitigate the full impact of the loss of the £20 Universal Credit uplift, particularly during the winter months and for people who aren’t working, it is positive that the government has recognised the need to support families on the lowest incomes by reducing the Universal Credit taper. We also welcome the focus on homelessness prevention and longer term commitment to reduce homelessness but it is disappointing that there is no additional, long term funding for all forms of supported housing, which is vital for allowing those with support needs to thrive in their home and can reduce pressure on adult social care.

"Unfortunately, the consequences of no additional direct funding to fix building safety issues in social rented homes will be far reaching, leading to a loss of new affordable homes and less money for existing social homes. However we support the Residential Property Developer Tax, which goes some way toward holding those responsible for this crisis to account for the cost of making buildings safe in the future."

Derek Sweeting QC, Chair of the Bar Council 

"The announcement by the Chancellor today is a step in the right direction but there will still be a shortfall of funding to tackle the justice crisis, restore public confidence and reduce the backlogs in our courts and tribunals. Moving forward the Bar Council will be engaging with the profession, courts service and Ministry of Justice to rebuild our justice system."

Paul Dossett, Head of Local Government, Grant Thornton UK

“There were more spending commitments than expected in today’s Spending Review with budget increases announced across all departments, and an estimated average increase of 3% a year in core spending power for local government.

“This increased funding is by no means a silver bullet. According to our analysis of provisional government data, 79% of English councils overspent on their budgets in 2020/21 so, while new funding is clearly needed, how far a 3% increase will go is unclear.

“With an increase to the National Living Wage of 6.6% announced, inflation set to hit 4% and public sector pay increases re-instated, alongside normal council running costs, this increase is unlikely to be a game changer for the sector – with any increase absorbed by rising wages and other cost increases. The extra support will also vary by region and so, while it’s encouraging that we haven’t seen a direct return to austerity, tough decisions are likely to remain for the sector through the medium term in managing service and demand pressures.

“To support economic recovery the Chancellor also announced a number of discounts on business rates for certain sectors and those undertaking property improvements. While significant support for the business community, this will result in lost revenue for councils and they will need to seek assurance that the government will provide additional funding for this loss.

“The homelessness crisis remains the biggest variable in the sector. The new £639million of funding announced for this today is likely to be a mere drop in the ocean compared to what’s needed to really tackle this growing crisis across the country.”

Jonathan House, Local Government Leader at PwC

“This Spending Review goes some way to showing us where the Government will focus its effort to level up the nation. It is critical that the much anticipated Levelling Up White Paper goes beyond high profile infrastructure and connectivity projects, and it’s welcome to see that at least 100 local projects will benefit from £1.7bn of funding from the first round of the Levelling Up Fund.

“While central government holds the ultimate responsibility, there is a clear opportunity for mayoral authorities and local councils to play a leading role in delivering on the levelling up agenda and building on its strengths in terms of local representation and the trust of the public.

“Local leaders must now be given the resources to translate Whitehall policy to the local context and ensure coherent delivery to those communities most in need of levelling up.”

Nick Clarke, Head of Social Care Consulting, Grant Thornton UK LLP

“The biggest financial pressures most councils are currently facing is in relation to social care where structural demand and inflationary cost pressures show no sign of slowing down.

“This is already having a direct – and significant - impact on the NHS as some people cannot be discharged safely from hospital into residential or home care as there’s no capacity to provide the care needed. Which is, and will continue to, directly impact the NHS’ ability to reduce the backlog in surgeries, even with the additional funding announced today.

“The £4.8 billion funding to local government for social care, and the recently announced Health and Social Care Levy, will help paper over the cracks for some councils for a while longer. But it will not transform social care and until the collective budgetary need of both the NHS and social care, together, is considered to meet the short and longer-term challenges they face – with a fully integrated approach to tackle those challenges, especially around prevention - nothing will.

“Ultimately, when their specific allocations are made, councils will still face tough decisions on how much to allocate to social care departments. With an ageing population, more complexity of need, staff and carers leaving the sector for better paid jobs, significant increases in safeguarding enquiries, inflation busting increases in care costs, the National Living Wage increase, more people with mental health needs, spiralling SEND spend and more children needing social care support and intervention, the list is nearly endless and the decisions unenviable. And the money will go very quickly.”