PLC Public Sector reports:
The Local Government Association set out its wishlist in advance of today’s budget. Among other things, it called for “smart” spending with a focus on small-scale infrastructure projects that can deliver immediate results, money for town centre facelifts and local transport, and more government help for small business and the general public to take advantage of existing tax breaks and benefits.
How did the LGA’s proposals fare in today’s budget? Is it a thumbs up or a thumbs down?
There is clearly some good news for local authorities in the Budget and other recent associated government announcements. For example:
The Government has agreed to provide extra funds for projects that rejuvenate town centres (admittedly only £3 million against the LGA request for £100 million!). The Government has also agreed to relax planning restrictions in some instances to assist with this regeneration.
£100 million of the £500 million of extra funds promised to ease the housing crisis will be placed in the hands of local authorities with a view to building more social housing. These extra funds are part of a package of assistance for the house building industry including the delay of the introduction of the community infrastructure levy until April 2010.
The Budget announces that Manchester and Leeds will be the first “city-regions”, with the intention of giving them greater control over how budgets are spent in areas such as adult-skills, housing and employment initiatives.
However, these developments need to be weighed against the extra strain that is likely to be placed on local government service delivery by the contributions that local government is being asked to make to the Operational Efficiency Programme. The Budget has accepted the findings of the OEP in full and is seeking to make an additional £15 billion per year in efficiency savings above its 2004 Gershon target. A significant amount of this will need to be met by local government (including an extra £600 million next year as a result of the Budget).
While there are undoubtedly savings to be made in many areas of the public sector, including local government, there must be a very real risk that a continued, “relentless” squeeze on budgets, even if targeted at back-office functions, will have an impact on the delivery of front-line services. This will be the case even where extra funds have been promised in areas such as health and education. This risk can only be exacerbated by the current fall in revenues being experienced by local authorities.
With regard to the other items on the LGA’s wishlist, there appear to have been some successes, £435m was committed for insulation improvement and better central heating for homes, businesses and public buildings. However, there are also numerous failures, including no mention of potholes!
Overall, are the proposals for spending “smart”? If they are, they are not necessarily smart in the way that the LGA wanted. Spending on small scale, local projects as suggested just isn’t going to win a general election! The LGA has cautiously welcomed the extra funds allocated to them in the Budget, but warned that they need to be given greater flexibility in deciding how they are spent.
We’ll leave you to decide whether the thumb should go up or down, although we suspect that this decision may depend on the small print that the Government is yet to produce.