Given the current run of political crises, the Government might be looking forward to the familiar distraction of the Budget announcement. On the other hand, however, there is the rising interest rates, abysmal productivity and a £1.8tn national debt to account for; and let’s not forget the stagnation of Brexit negotiations.
Regardless of how well or poorly negotiations are going, it is very likely that Brexit will have a detrimental impact on growth, at least over the next five years. Furthermore, the uncertainty over the final outcome is likely to continue adding strain on the sector over the short term, for example, unfulfilled vacancies. And so it is important that the impacts on the public sector are given the necessary considerations.
While this must be addressed in the Budget, in truth, the chancellor has little room to manoeuvre. The public sector has experienced several years of deep cuts, leaving tremendous strain on those delivering public services. As we highlighted in our Performance Tracker report, which was developed with Institute for Government and released last month, the era of tight spending controls is far from over and will most likely last long into the next decade.
Nevertheless, CIPFA continues to urge the Government to understand the impact of previous spending decisions on public services in terms of efficiency, scope and quality. There needs to be a better understanding of the performance of, and the pressure on public services before making future policy and resourcing decisions. It is more important than ever that funds are used as efficiently and effectively as possible.
But while we should not expect any rabbits to be pulled from hats, particularly for local government, we would expect announcements on a number of pressing issues.
It remains crucial that adults and, increasingly of concern, children’s social services are put on a sustainable footing. The introduction of the precept on council tax to pay for adult social care provides short-term support but it does not address the longer term needs. Given how the Government is currently struggling to achieve any coherent policy or action, the long promised green paper is highly unlikely to materialise, but if this issue has any chance of being properly addressed, government must set out a tenable proposition for long-term funding before services start to fold.
Children’s social care is increasingly pressing. As set out in CIPFA’s Changing Children’s Lives report, demand is outstripping budgets and there are wide variations in both spend and effectiveness between local authorities. For both adult and children’s social care, there needs to be a better understanding of the broader context and the specific frontline realities in local places.
Second, if the promise of one million new homes is to be achieved, housing policy must focus on flexible investment, sustainable and consistent rent policies and effective replacement of assets. As part of this, local government should be given greater freedoms and flexibility to build new homes and replace existing stock reduced under right to buy. As a related factor, there needs to be stability in rent policies.
Third, and in addition to widening access to devolution, CIPFA would like to see a coherence in the medium- to long-term financial plans the sector currently lacks. The absence of a legislative window for 100% business rates retention puts serious doubt into the likelihood of it happening in 2020 or indeed at all over the life of the current government. That is not to understate the enormous challenges in such a policy in accommodating those areas with good business rates prospects and those without. The doubt about the long-term agenda now places into question the purpose of current and new pilots for 100% retention.
The Government needs reforms to diversify local government funding as well as instigating system changes such as business rates retention or services will remain unfunded. In all other developed countries, local government raises a much more significant share of their nations’ tax yield than here in the UK and thus avoids the problem that government favours its own services over local government ones.
Sean Nolan is director of local government at CIPFA