As we move nearer to the autumn budget, the excitement begins to mount and the rumours about its content come thick and fast.
When the big day arrives it is, I think, important to hold in one’s mind the fact that the original plan for austerity was that it would fade away after five years and then a normal approach be taken to increases in local government funding. Government borrowing has, however, continued to grow over that period, and austerity is likely to be with us until the mid 2020s.
Of course, while local government cuts spending, central government has moved the other way. Tony Travers showed in his presentation to the recent annual conference of the Institute of Revenues Rating and Valuation that in cash terms local government spending has fallen by 10% over the last seven years—with some non-discretionary services falling by as much 40% over that time—while central government has risen by 21%.
And its hard to get a fix on whether its possible for the chancellor to change tack. About two weeks ago the papers told us that Philip Hammond had received a lucky windfall and would be generous in the budget. A few days later those party poopers at the Office for Budget Responsibility were announcing that productivity had been hopelessly overstated and they were revising their forecasts to a state of complete gloom.
The chancellor’s position is further complicated by difficulty knowing what he should provide for the Brexit divorce payments to the EU, which should bring close attention his way and no let up in budgetary pressures.
We must be honest, the budget is invariably disappointing to local government although there will be a flurry of policy papers in the days following. That said, it is understood that the green paper on social care will not be issued until the end of the year and there is already a general feeling that there are few alternatives to financing care from the sale of homes. Spending decisions to date have not helped in this regard. Tony Travers, in his address, showed the large increase in the recent past to pensions compared to the money devoted to adult social care. He raised the question of whether it would not have been a better use of government money to support social care rather than the generous arrangements offered to pensioners.
Resurgence
The resurgence of the steering group on the devolution of business rates is an interesting tale. The minister in charge seems to feel that much can be achieved without involving primary legislation. I am a little worried that something important may have to be sacrificed to achieve that. Time will tell. The fair funding group will be the focus of attention and, given there must be winners and losers, they have a rotten job.
One policy that does seem destined for the budget is the end of the public sector pay cap, though I expect the overall target will not change much. There will, I suspect, be some leeway for the lower paid. And, as I have noted before, there are many candidates for extra finance which may find popular appeal ahead of local authorities such as the NHS, schools, police, fire, state pensions to name but a few.
There has also been no word on a final decision on any of the unitary applications. There must be a concern that such changes will bring additional uncertainty on the way to the promised land. Anyway, I shouldn’t comment; after my last article mentioning unitiaries, I was taken to task by people pointing out that France and Denmark have thousands of very small, sustainable local authorities and there may be an argument for returning to the parish system. To be fair, the comments weren’t quite that extreme but the localism sentiment was strong.
The point is that fudge and muddle are unlikely to bring great improvements and a clear vision for the future is an essential to move safely forward
Richard Harbord is a former chief executive of Boston council.
