It was trailed as the budget to redefine the relationship between individual and state – and that’s certainly one way to describe it. Chancellor George Osborne promised “no roller-coaster ride in public spending” early in his speech, today delivering the first Tory budget since 1996.
But for councils that have already seen their funding cut by 40%, the chancellor’s plans to cut Britain’s deficit at the same pace as in the last parliament will still be grim – though progress on devolution is something to cling on to.
Here are the key points for local government, plus reactions from the sector.
The money
Pay:
- Public sector pay rises restricted to 1% for next four years. This is on top of a pay freeze that has already lasted five years.
- New national living wage of £9 by 2020 introduced. It will apply to over-25s, and start next year at £7.20.
Budgets:
- Councils spared further cuts. “The new government has used its first budget to loosen significantly the impending squeeze on public services, financed by welfare cuts, net tax increases and three years of higher borrowing,” said a Office for Budget Responsibility (OBR) report.
The power
Devolution:
- 10 councils in Greater Manchester to gain control over fire services, a new land commission, children’s services and employment programmes, in exchange for a directly elected mayor.
- Sheffield, Liverpool, Leeds and west Yorkshire are negotiating similar devolution deals. Osborne said he wants to “put the power in the northern powerhouse”.
- Osborne in discussions with Cornwall, which could be the first county council to take control of devolved health and social care budgets.
- New enterprise zones for smaller towns.
Other new powers:
- Towns and cities to decide rules on Sunday trading laws, which currently limit supermarket opening times to six hours on Sunday.
The responsibility
Welfare:
- The £12bn welfare savings will hit younger residents and poor families hardest. There will be no automatic housing benefit for 18- to 21-year-olds and child tax credits will be restricted to two children by 2017. Working age benefits will freeze for four years, with benefits capped at £20,000 from £26,000 (£23,000 in London).
Housing:
- Rents in social housing to be reduced by 1% a year for the next four years. Local authorities and housing associations will have to make efficiency savings to fund the rent reductions.
- Wealthy social housing tenants to pay market rates.
Transport and infrastructure:
- Oyster-style ticketing to be introduced in the north of England.
- New roads fund will ensure sustainable investment in roads from the end of the decade, funded by a new vehicle excise duty for new cars from 2017.
Budget reaction
LGA: “Progress made on devolution deals is good news”
“The progress being made on devolution deals announced in today’s budget is good news. Devolution across all parts of England is the best way to create jobs, build homes, strengthen communities and protect the vulnerable. We know many more places will come forward with proposals in the next year and we are keen to work with the government to meet the scale of the ambition of local areas.
“Any additional income from today’s announcement that social housing tenants will have their rents raised to market value should be retained by councils. It would benefit local communities more if it was spent building new homes rather than going to the Treasury.
“Despite rightly being spared further in-year core funding reductions in 2015-16, councils would have faced significant challenges over the next few years whoever had won the election. All eyes within local government will now be fixed on the spending review in the autumn.”
– Gary Porter, Conservative chairman of the Local Government Association
Solace: “Services for vulnerable children and adults must be up to the challenge of further reductions in welfare spending”
“Solace welcomes the introduction of the living wage that many councils have pioneered.
“Local government will need support to ensure our services for vulnerable children and adults are up to the challenge brought by further reductions in welfare spending – and that the push to greater home ownership amongst social tenants is backed up by a commensurate ability for us to supply the homes required to fulfil our duties to those on our housing waiting lists.
“In the longer term, we know that future cuts are on the way and that councils’ simply continuing to take cuts to our revenue grant is not sustainable. The pressures on social care, and on housing, are not sustainable. However, looking ahead to the autumn spending review, this could be a real opportunity for the government to fundamentally rebalance its relationship with local government; working with us to chart out [a] course to greater self-sufficiency.”
– Solace, the society of local authority chief executives and senior managers
NALC: “There was much talk of creating ‘northern powerhouses’ but we’d like to see ‘localist powerhouses’ too”
“We would have liked the budget to say more about how devolution of power to communities and local people could help us meet the current financial challenges. There was much talk of creating ‘northern powerhouses’ but we’d like to see ‘localist powerhouses’ too, with parishes and their volunteer support running a range of local services to reflect local circumstances. From providing shuttle buses to reducing traffic in towns, to building dementia-friendly communities and supporting older people.
“The chancellor acknowledged recently how communities and very local councils are the unsung heroes of house building via neighbourhood planning. The government has a fantastic chance to build on some of the building blocks laid over the last five years. Our neighbourhood, villages and towns want more decentralisation and devolution.”
– Ken Browse, chair of the National Association of Local Councils
LGiU: “Changes to welfare and housing will have huge consequences for local government”
“In the first Conservative budget for 18 years, the chancellor clearly reiterated his commitment to devolution. While we didn’t really learn anything new, the announcement of the first county deal with Cornwall will increase a sense of urgency for non-metropolitan areas to get their proposals in to the government before they get landed with someone else’s versions of devolution.
“Changes to welfare and housing will have huge consequences for local government, which will have to find efficiencies to replace lost social housing rents and to ensure that welfare changes do not simply create more emergency demand in other parts of the system.
“Some will see this as the government irresponsibly passing on difficult decisions to councils: others will see it as the flip side of devolution – the responsibility that comes with power.
“That’s a debate that probably can’t be resolved, but what is clear is that the need for local government’s strategic leadership role is more crucial than ever if we are to move to the lower tax, higher wage, lower welfare society the government aspires to.”
– Jonathan Carr-West, chief executive of thinktank LGiU
LGA (Labour group): “Meaningful devolution is needed, without strings attached”
“The devolution for greater collaboration on employment programmes, children’s services and a new land commission to Greater Manchester are welcome, but other parts of the country should not miss out. Leeds, Liverpool and Sheffield are set to have directly elected Mayors, but why should this be a prerequisite for more local powers? Meaningful devolution to all areas of the country is needed, without strings attached.
“£30m for transport for the north is positive, but this comes hot on the heels of the government announcing the ‘pausing’ of plans to electrify the Transpennine rail route. The government’s so-called ‘northern powerhouse’ is in danger of suffering a power cut.
“The autumn spending review will contain more news on local authorities’ funding. For now though, on devolution and rebalancing the economy, the budget offers some limited signs of progress. But on welfare reform, the government has picked the wrong target by swinging its axe at families and the working poor.”
– Jim McMahon, leader of the LGA Labour group
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