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Budget 2016: reaction from the sector

We round up reactions in the local government sector to this year’s Budget.

Lord Porter, Chairman of the Local Government Association

“It is right that the Chancellor has recognised the funding pressures facing councils and local services over the next few years and has not announced any more cuts to local government.

“Councils now need a period of financial stability and consistency so they can plan for the pressures facing local services which lie ahead over the next few years and need to be protected from any more funding cuts during this Parliament. This, alongside greater power to run local services, is essential.

“Devolution deals agreed today are good news for local communities and councils which have worked hard to get them in place and rightly recognise the economic potential of England’s county and rural areas. To build desperately-needed homes, create jobs, provide the dignified care for our elderly and boost economic growth, all councils need greater freedom from central government to take decisions over vital services in their area. A total of 34 devolution proposals – from cities, towns and counties – have been submitted across England. These new deals and extensions to existing deals must signal a return to the early momentum in which similar deals were announced last year. This will clearly require different approaches for different areas, including how they are governed.

“It is disappointing that the Chancellor has not accepted calls by councils, the NHS, care providers and the voluntary sector to bring forward the £700m of new money in the Better Care Fund by 2019/20 to this year. The failure to do so means vulnerable members of the community still face an uncertain future where the dignified care and support they deserve, such as help getting dressed, fed or getting out and about, remains at risk. Vital social care services will also increasingly be unable to help ease the growing pressure on the NHS and the threat of a care home crisis will creep closer to becoming a reality.

“The LGA also reiterates our opposition to forced academisation of schools. It's vital that we concentrate on the quality of education and a school's ability to deliver the best results for children, rather than on the legal status of a school, to make sure that we're providing the education and support needed in each area.

“Allowing local government to keep 100% of business rates is key and is something the LGA has been campaigning to achieve for the last decade. While it won’t in itself solve the long-term challenges facing councils and local services, allowing local government to retain 100% of its business rates income is now vital. Pilots announced today are an important first step, although it will be important to avoid a knock-on financial impact on other councils, and local government will rightly need to play a lead role in making sure any new national system works effectively and fairly.”

 

Phil Williams, President of the Royal Town Planning Institute

“We welcome in principle new measures to boost housing, build infrastructure and further extend devolution deals. It is absolutely crucial however that we invest in local planning services to help the government deliver what it has announced today.

“We are delighted that Ministers are now supporting our call for greater transparency in the land market. We strongly support the simplification of the local plans process and await the detail on the promise to speed up the process for delivering new settlements.

“The issue of zonal planning is one we will particularly want to discuss with ministers as little detail of what might be planned was published today. RTPI is interested to know more about what is meant specifically by a more zonal planning system in the context of England's plan led system. We have already written seeking clarification as to whether this represents new proposals or ones currently with Parliament and out for consultation."

 

Tiffany Cloynes, Partner at Geldards

"The Budget has delivered some interesting challenges for local authorities. Local authorities in England have been considering how they will be able to make maximum use of their right to retain 100% of business rates when this comes into effect but, following the Budget business rates announcements, councils are faced with the prospect of the amount available from business rates being less than expected. This brings more pressure as they continue to deliver effective services with scarce resources.

"The announcement of further devolution deals in England shows the impetus that devolution is gaining. The ring-fenced funding being made available to areas with agreed mayoral devolution deals will give those areas the practical means to show how effectively the new arrangements can work. The announcement of expected funding through initiatives such as growth deals with local enterprise partnerships could present some exciting opportunities for regions to develop.

"As Geldards has advised on many successful academy conversions, we are aware of their potential to deliver excellent standards of education, however many people do not agree that they are appropriate in all circumstances. The forced move to academies is likely to continue to be controversial.

"It was interesting to see that Government intends to introduce new rules about the transparency of provision by local authorities of in-house services. Local authorities consistently show their commitment to transparency, hopefully the introduction of new rules will not add to their administrative and financial burden."

 

Cllr Paul Carter, Chairman of the County Councils Network (CCN) 

On local government finance: “CCN welcome the news that Government will not impose further cuts on local government in the short-term. Business rates discounts will come as a welcome boast to local high-streets, small and medium sized businesses. However, questions remain over how the £6.7bn of tax breaks will be funded. 

“It is important that Government fully compensate councils for any loss of income. This should not be an additional financial burden for authorities, who will wholly rely local taxation by the end of the Parliament.

“In deciding where the new £3.5bn of unspecified savings in 2019/20 will fall, hopefully Government will respect their commitment to a fair and sustainable long-term financial settlement for councils. 

“County councils have already delivered unprecedented efficiency savings to the public purse and will continue to do so during this Parliament. We cannot underestimate the challenges counties face in delivering balanced budgets and protecting the frontline services in the coming years.”

On devolution: “CCN have led the debate on devolution outside our major cities. Today some real progress has been made, with substantial deals empowering the historic counties of Lincolnshire, Cambridgeshire, Suffolk and Norfolk. Such deals will see billions of pounds of infrastructure investment for these areas, and transport, skills and growth decisions brought closer to the people and businesses they affect.

“These deals are rightly built around county geographies and two-tier collaboration and include changes to local democratic structures, with the first non-city Elected Mayors.

“CCN will continue work with these member councils and Government ensure arrangements are sustainable going forward. In doing so, the coherence of county geographies and the service expertise of county councils will be vital elements in driving growth and reforming public services.

“Building on our scale and strategic capacity and working with our district partners, counties must be empowered to capture the benefits from devolution, safeguard the most vulnerable and maximise efficiencies in delivering local services.

“This Budget should signal a further drive towards empowering local partners to deliver real change for local residents. To realise a Devolution Revolution we hope to see further transformational county ‘deals’ agreed across the country over the coming period.”

 

Judith Barnes, Partner at Bevan Brittan

“Local authorities now face a difficult balancing act in which they have to juggle a number of unknowns or semi-knowns.

“They need to produce a four-year efficiency plan by October of this year in order to secure a four-year funding settlement. But it is not clear yet – until a Treasury ‘study of options’ has concluded – how the £3.5bn annual spending cuts will fall and to what extent they will impact on local authority budgets.

“After the CSR in November some authorities were already facing negative Rate Support Grant.

“They have the prospect of keeping business rates income, and in Greater London this will start from next year – but the move to CPI rather than RPI means that incomes will be lower than they would have been, while business rate reliefs are being increased on a permanent basis particularly to small businesses which means the take will reduce further.

“They will see schools move out of their control by 2020 – but there will be a considerable burden on them to support the legal processes around conversions to academy status.

“Devolution deals are gathering pace and number and we have seen more regional deals announced. The pressure will therefore be rising on those authorities who have not yet brokered a deal to either agree to an elected mayor or consider reorganisation.

“All of this needs to be done against the backdrop of local authority departments being cut back quite considerably whilst also being asked to take on more responsibilities to support other bodies such as LEPs and Combined Authorities.  The ability to prioritise this and work together is going to be increasingly important.

“Authorities will need to think hard about their governance, how they collaborate with private sector partners and particularly private sector suppliers, and about key project and statutory requirements for delivery of services.”

 

Dr Jonathan Carr-West, Chief Executive of think tank LGiU

“This is a budget that will leave many in local government deeply anxious.

“The Chancellor announced £3.5bn extra cuts in public sector funding by the end of the parliament. It’s not clear where these cuts will fall but experience suggests they will hit local government either directly or through the knock on effects of cuts to welfare benefits.

“Only two months ago local government was offered the ‘certainty’ of a four-year funding settlement, but that certainty already looks illusory.

“Elsewhere, there was better news, with progress on three new devolution deals, but many of the deals we expected were not announced and it remains to be seen whether the Government’s somewhat secretive, deal-based approach to devolution will help or hinder it.”

 

National Housing Federation

On devolution: “We welcome the Chancellor’s announcement that further Mayoral devolution agreements have been reached with East Anglia, the West of England and Greater Lincolnshire. The commitment to a ring-fenced £175m housing pot as part of the East Anglia deal, and additional single pot funding for local priorities in other areas will increase the ability of new combined authorities to deliver on their vision for housing.”

On homelessness: “We are pleased that the Government is tackling the problem of increased rough sleeping. If this money can address some of the structural issues around the supply and affordability of homes, then this will be very welcome. Supported housing is vital if providers are to continue to run hostels and refuges which are needed to prevent rough sleeping. We will continue to work with the Government to secure the future of supported housing.”

In response to changes to stamp duty land tax: “We are concerned that the decision not to exempt significant investors from the higher rates of stamp duty land tax (SDLT) has the potential to undermine the delivery of large-scale, purpose-built market rented housing. Whilst housing associations’ charitable activities benefit from exemptions from the higher rate of SDLT, this change may reduce their investment in high-quality market rented housing.”

On garden villages: “The move to introduce new legislation to speed up and simplify the process for delivering new settlements is welcome. These new developments will require both political and financial support if they are to be delivered. It will be critical to ensure that these new communities provide homes across the full range of tenures to ensure that they are truly sustainable.”

On transparency in land market: “The Federation has long-called for increased transparency in the land market and welcome the consultation on proposals to do this. The lack of transparency over ownership and options has long acted as a barrier to increasing housing supply – often keeping land out of the hands of those wanting to develop.”

On public land: “We welcome the Government’s continued commitment to releasing public land for housing. Making more strategic use of local authority land is crucial and the announcement that local authorities will collaborate with central government is a step in the right direction. It’s important that central and local government take steps to ensure all land released delivers new homes quickly.”

 

Terrie Alafat, chief executive of the Chartered Institute of Housing

"CIH has been calling for more measures to address homelessness and rough sleeping and today's announcement of an investment of £115m to tackle rough sleeping is good news.

"It will go some way to supporting vulnerable people who need a home and we hope it marks the start of more action to come to end homelessness in this country. Homelessness is increasing and we would like to see additional investment in services to prevent homelessness and in more affordable housing."

 

Cllr Neil Clarke, chairman of the District Councils’ Network (DCN)

“The strong focus of today’s Budget announcement on continued growth in the economy is welcomed by DCN. The vital role played by districts in supporting economic and housing growth is well-understood and DCN supports the clear link the Chancellor has made between business growth, increased housing and investment in infrastructure. In addition, the fact that two of the three devolution deals announced, East Anglia and Greater Lincolnshire, encompass some 25 district councils recognises the key role that district areas play in delivering growth.

“We are greatly encouraged that this is the first stage in advancing resources to recognisable economic geographies, where local people can influence decisions that not only affect their own community, but also contribute to the national economy.

“Today, the devolution journey has truly started in district areas, and these deals mark, DCN hopes, the first stage in advancing greater economic freedoms and increased powers to boost local growth, shape places and reform public service delivery for some 22 million people across England.

“The re-confirmation that 100% of business rates will be retained locally by 2020 is welcomed, as is the increased support of small and micro-businesses. However, we will need to more fully understand the longer-term implications of the £6.7bn small business rate relief on the overall resourcing for local government post-2020.

“DCN looks forward to working with Government and the wider local government family to ensure not just funding stability, but the modernising of public sector resourcing in the round to sustain economic growth and public services.

“On a final point, DCN welcomes the additional funding to allow strategic housing authorities, including district councils, to tackle homelessness. In our view, such funding should be distributed in a simple and straightforward manner, without the need for an overly-bureaucratic bid process.”

 

Grant Thornton

“The Chancellor confirmed in his budget today that trade and growth in the global economy was materially weaker than in previous OBR forecasts. This entails obvious challenges for local government in growing the tax base to balance budgets. 

“The Chancellor has promised a further £1.8bn through Growth Deals for regional spending by Local Enterprise Partnerships and a further £2bn through the Home Building Fund to unlock large housing sites. This is welcome, given the scale of the housing challenge, but arguably reinforces ring-fences rather than promoting autonomy for place-based leaders. Measures to reform planning and accelerate house building are welcome, but it is not yet clear whether they will go far or fast enough to cool down dangerous overheating in parts of the country. 

“The Greater London Authority has been promised 100% retention of its business rates from 1 April 2017, three years ahead of the full roll-out of the business rate reforms. We support this move, but believe it should be piloted in other areas in parallel, such as the recently created Combined Authorities. However, the Chancellor has also promised to cut the burden on ratepayers in England by £6.7bn over the next five years by cutting business rates for all properties, ensuring the smallest businesses pay no rates at all and modernising the tax system. There is a risk that local government may be receiving ‘all of nothing’ rather than a ‘share of something’. It is not clear at this stage what new responsibilities come with this devolution of business rates, and there could be a risk that the cost of these new responsibilities will not be offset by increased business rate income. 

“The announcement of three further devolution deals out of the 34 submissions in September 2015 does not set a blistering pace. The Government must act faster and work more collaboratively with other localities to confirm other devolution deals.  An imposed governance model of a metro mayor has been an inhibitor for other localities. It will be interesting to see if the Government is able to retain momentum on future devolution deals in the run up to the EU referendum in June. 

“City regions with pre-existing devolution deals have been given another bite of the cherry, with additional criminal justice powers for Greater Manchester, further announcements on transport and business rate retention for the Liverpool City Region, as well as new investment in transport and infrastructure across the Pennines. 

“Finally, some aspects of the budget stood out as running counter to the devolution message. The Chancellor made a point by saying he inherited a system where local government received 80% of its funding from ring fenced grants but by the end of this parliament they will be 100% funded from locally raised income spent locally. Yet buried in the budget detail is a £50m Pothole Action Fund for England in 2016-17 to enable local authorities to fill nearly a million potholes. More significantly, the Chancellor's announcement to move all schools to become academies is a clear centralisation approach that does not chime with the overall devolution message.”

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