Phil Briscoe, Managing Director at Bellenden, a political and corporate affairs consultancy, gives us his analysis of the Spending Review.
George Osborne yesterday delivered his latest review of the nation’s finances, and the trend of spending cuts and devolved budgets continued.
The Department for Communities and Local Government (DCLG) will face a further 29% budget reduction over the course of this Parliament, and the Local Government Association has quantified the additional cuts as representing £4.1 billion for local residents.
However, to deliver on his promise to “rebuild” the country, Osborne outlined a £20 billion capital investment to deliver 400,000 more homes across a number of initiatives, including a pot dedicated to regenerating large council estates. The right-to-buy extension for housing association tenants will be piloted in 24 boroughs and as of midnight last night, the five initial housing associations to trial the policy will be L&Q, Sovereign, Riverside, Saffron and Thames Valley.
But aside from the national initiatives, the underlying theme for local government was to devolve more powers and financial decisions. The devolution agenda is underpinned with DCLG control of the £12 billion Local Growth Fund, but additional pots of money included a £400million Northern Powerhouse investment to help small business, a £5 million investment in Manchester Museum and an extra £150 million to support oyster style ticketing across the North. Encouraging regional growth was further highlighted with the creation of a further 18 enterprise zones and a £300 million commitment to the new town at Ebbsfleet.
The devolved assemblies benefitted too, with additional money for infrastructure projects seeing a 14% increase in Scotland, 16% increase in Wales and 12% in Northern Ireland, and the crucial element being that each government will decide where the money is spent.
Additional local tax-raising powers from April 2016 will give local councils and local police forces the ability to each increase taxes by up to 2% – for the police, this will fund operational improvements while the extra council cash can be directed towards local social care.
Local authorities will have to wait until 2020 before they will be able to keep the money raised from local business rates, and with the promise that these funds can be used for the delivery of street repairs, local transport initiatives and services such as libraries, it will liberate councils to set local taxes and shape the face of their local high streets and business communities.
Greg Clark, Secretary of State for Communities and Local Government, was an architect of localism and the devolution agenda, and this latest spending review further reinforces those ambitions. It is clear that George Osborne also shares those ambitions, although his motives might ultimately be based around slashing national budgets and grants, and replacing extra local authority spend with locally raised taxes.
It would seem unlikely that we have seen the last of tax-raising powers for local government, and the agenda will continue to relocate responsibilities away from Whitehall, and in the process move more of those bills off the Chancellor’s desk.
For more information on Bellenden, please visit http://www.bellenden.co.uk/