If the Government’s priority was stability, the Autumn Statement failed to deliver, says Jessica Studdert. It has just shunted the problems into the long grass - and onto local government
It was billed as prioritising stability, but the Autumn Statement did the opposite for local public services and communities by confirming only more instability for the foreseeable future.
The Government’s priority was to stabilise the economic volatility created by the previous administration, and by extension their political reputation ahead of a general election. So, over the next couple of years some unexpected cash injections provide a lifeline for mainstream public services, health and education (and social care if you include extra headroom on council tax increases).
The extra sums committed fell short of respective sectors’ identified funding gaps. But the point was to assure the markets and voters, not to genuinely put public services on a sustainable footing.
The real fiscal pain for public services has been deferred. In what could be seen as primarily an electoral over an economic strategy, spending plans which remain fixed ahead of a general election will be combined with a deeper squeeze afterwards.
On current projections, over £30bn will need to be found across departmental revenue and capital spend in the first three years of the next Parliament, in addition to another £30bn from tax revenues.
Local government faces a series of threats to budgets and capacity that are unlikely to be substantively recognised by this government. Sunak’s administration looks set to be increasingly short-termist and focused on self-preservation as the national economic and political environment deteriorates amidst a long recession.
Most immediately, despite fixed spending plans for the next two years, rocketing inflation nonetheless means councils will need to run ever-faster just to stand still. Pressures on wage costs will increase as workers themselves face higher costs and a (welcome) higher living wage kicks in. Levelling Up allocations will face rising project costs, blowing apart original plans.
The Government’s preference for passing on risk to councils rather than take steps to reduce it, was demonstrated with its council tax referendum threshold increase to 5%. Instead of putting vital provision such as social care on a stable ground, the buck is passed to councils to add to pressures on hard pressed households, without actually resolving chronic underfunding.
In the medium term, local government has barely exited the first round of austerity before another one looms. The Osborne playbook of relative protection for core health and education budgets and deeper pain for unprotected departments seems to be back. Although spending plans haven’t been confirmed beyond the next two years, this doesn’t bode well for local government.
Of course, the decision-making framework in the next Parliament will be determined by the party in office. But with public finances having little room for manoeuvre, there is always a risk the more mainstream public services with wider use and potentially more visible deterioration are the more politically popular ones to protect.
The work of local government is quieter and less commonly understood, as the safety net of last resort to many in crisis – whether homeless, children at risk or adults with care needs.
There will be an increasingly urgent need to tell both the powerful ‘heart’ story and the compelling ‘head’ business case of the value of local government. Its range of public health, environment and housing provision is fundamental to supporting the fabric of communities.
Both indirectly through these wider determinants of health outcomes and directly in terms of social care, the role of local government is the definition of prevention and early intervention. If effectively resourced it will support more people in their homes and neighbourhoods, relieving pressures on other public services. But if reduced further the consequences of gaps in provision and higher statutory thresholds will simply add to acute needs.
Certainly, amidst falling living standards and a prolonged recession, the challenge of rising demand for local services is set to continue apace. Increasing numbers of people tipped into poverty and destitution will change the nature and urgency of that demand. Alongside pressures on existing services for people in crisis, will be more people who have basic unmet needs for food, warmth or access to personal hygiene.
Councils who are working with local voluntary and community partners to prepare for a grim winter frequently liken the mobilisation to that of the Covid crisis response.
How soon we reach a point of genuine stability remains to be seen. But given that the pressures on the public finances come from spiralling inflation and higher borrowing costs, it should not be for public serices to bear the consequences. We know that the first round of austerity simply embedded fragility, which in turn has weakened our ability to sustain growth. We should strongly resist repetition of those mistakes.
Jessica Studdert is deputy chief executive at New Local
