One day on from George Osborne’s eighth budget, we round up the local government response and analyse what the budget really means for local authorities.
For local government, yesterday’s announcements regarding business cuts were the most difficult to digest. The Chancellor reaffirmed his commitment to 100% business rate retention and announced that the Greater London Authority would move to this system next year, three years ahead of other councils.
However the Chancellor giveth and, it seems, taketh away. As well as confirming the devolution of business rate retention to councils, he also announced business rate relief for small businesses as a result of raised tax thresholds. In the year 2016-17 the lower threshold for paying business rates will rise from £6,000 to £12,000 meaning that 60,000 small businesses will be exempt from paying business rates. Alongside that, the upper threshold will rise to £51,000 meaning that 250,000 small business will pay less. Whilst this is undeniably good news for the country’s small businesses it could mean a cut in income for councils when they move to full business rate retention. The sector has responded to this announcement cautiously, acknowledging that more needs to be done to work out the exact consequences of this announcement. Cllr Neil Clarke, Chair of the District Councillors Network, said:
“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.”
The announcement that all schools will be on the way to becoming academies or free schools by 2020 has generated a considerable amount of opposition from both local government and teachers. Lord Porter, Chair of the Local Government Association, said:
“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.”
And Chris Keates, General Secretary of the NASUWT, the largest teachers’ Union, said:
“It is deeply regrettable that the Chancellor’s Budget Statement reinforces this Government’s view that local authorities should play no role in education. The Chancellor’s ideological opposition to local authorities risks hitting children from disadvantaged backgrounds hardest, particularly those children with special educational needs and disabilities.
There has also been a mixed response to the Chancellor’s plan to lengthen school hours, with Keates adding:
“The announcement of new funding for 25% of secondary schools to enable them to extend the length of the school day in order to deliver education in music, the arts and sport must represent an admission of the failure of the Government’s education reforms over the last six years, which have seen these subjects squeezed out of the curriculum of many secondary schools.
Mr Osborne’s devolution announcements were largely expected and welcomed by local government. He said: “We have agreed a single powerful East Anglia combined authority, headed up by an elected Mayor and almost a billion pounds of new investment. We’ve also agreed a new West of England mayoral authority – and they too will see almost a billion pounds invested locally. And the authorities of Greater Lincolnshire will have new powers, new funding and a new mayor. North, South, East and West – the devolution revolution is taking hold.”
In response to the announcement Lord Porter said: “devolution deals agreed today are good news for 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.”
Alexandra Jones, Chief Executive of the Centre for Cities, had previously warned George Osborne against extending devolution deals to rural areas and responded by saying:
“the new deal for the West of England represents a welcome commitment from the Government to extending its devolution agenda, and will be particularly important to improving the UK’s poor productivity. But the Government also needs to hold up its end of the deal on devolution and resist the temptation to shift the goalposts as local government prepares to take on more responsibilities.