The MJ/NAO round table: Fallout from the Budget

In the first round table held last month participants were asked for their views on Chancellor Philip Hammond’s first Autumn Budget held in November. Most of them, perhaps unsurprisingly, were underwhelmed, although there were some supportive comments. Key issues were housing, funding, social care and infrastructure.

There were mixed reactions on housing announcements. One chief executive said: ‘The Budget was a damp squib for local government. It was disappointing on housing and I’m concerned relatively little is being spent on social housing. I’m also concerned about housing standards; two bed houses nowadays aren’t big enough to swing a cat in, whereas before we had Parker Morris standards.  It’s now become a numbers game and not about quality whereas it should be both.’ Another participant added: ‘‘May talks about tackling housing but doesn’t do anything. Actions don’t match the words.’ Scepticism about the housebuilders was summed up by one chief executive who said: ‘Developers give money to the Conservative party so I don’t see the government biting the hand that feeds it. It’s not in the builders’ interest to build more houses.’

However, there was support for announcements on stamp duty and infrastructure, one participant saying: ‘For the first time the Treasury is putting infrastructure before housing instead of the other way round’ while another added: ‘From our view the stamp duty change was welcome. We have an affluent population, lots go to university but can’t afford to come back because of high house prices. We’ve also got an increasingly elderly population but without younger people to provide the workforce.’ Extra cities funding was welcomed though viewed as a means of boosting the elected mayors agenda, one participant saying: ‘Half the money from the transforming cities fund is going to combined authority mayors. The government is obviously using this to tell other councils to get their act together and introduce their own mayors. It’s trying to make it more attractive to be in the club.’ However, another participant commented that ‘the fact a Conservative government introduced an industrial strategy at all is interesting. It’s not something they usually do.’

On funding the uncertainty over business rate retention and the fair funding review was a concern. One chief executive said: ‘I’m really concerned about negative RSG; 140 councils by 2019 will have negative RSG even though I’ve always thought RSG was there to support statutory services’, while another said: ‘The lack of government planning post-2020 means councils can’t plan for the future. This lack of certainty means sticking plaster solutions instead of transformation. The fair funding review gives even greater uncertainty.’ Other comments were ‘I’ve no idea what fair funding means’ and ‘we put in a bid to be a 100% business rate retention pilot because if you’re not a pilot it could have a big impact on budgets.’

The lack of any announcement on social care was a big disappointment, one saying ‘what was important was what wasn’t in the Budget, namely social care’ and another adding: ‘There was nothing on social care. There has to be new money and not just about re-arranging the deckchairs.’ One chief executive said: ‘The government doesn’t understand the relationship between health and social care. Local government was an afterthought in the STPs. There was an announcement about nurses’ pay in the Budget but nothing about care, which just shows the lack of understanding.’

Indeed pay was a big concern for all participants, one pointing out that a new Lidl store in their area had drained staff from nearby care homes because its wages were higher; and another saying ‘care is one of the big workforce issues, especially post-Brexit.’ The care market generally was also questioned, one participant saying: ‘It’s not cost effective for social care providers to provide care homes in rural areas and it’s difficult to recruit’, while the impact of the court ruling on sleep-in payments for carers will, according to one chief executive, ‘have a huge knock-on effect. Councils aren’t shouting loud enough about it.’

The next round table debate with The MJ and NAO takes place in London on January 26 and will focus on social care. A third debate will take place at The MJ Future Forum in London on April 26. For details about attending contact Katherine Smith, event coordinator, at  k.smith@hgluk.com

Budget ‘a disappointment’ for the sector

Abdool Kara, executive leader, local services, NAO and joint host at The MJ/NAO round table discussion, gives his own summary of the debate

The NAO is pleased to be running a number of round tables with The MJ in order to improve our knowledge of and build our networks with the local government sector.  This will ensure that our forward programme of studies focuses on the issues that are critical to the sector.

The event last month was our first such round table, held as part of The MJ’s excellent Future Forum North event in Manchester.  The conversation was themed around the sector’s views on the Budget only the week before.

The general sense around the table was one of disappointment.  Given the Chancellor’s lack of room for manoeuvre, both politically and financially, it was considered to be a safety first approach.  Even where there were new announcements, there was generally much less to them than met the eye, especially around housing – participants did not believe that the financial commitments or policy changes would deliver the stated 300,000 new homes per annum target, notwithstanding the forthcoming Letwin Review to challenge land banking by developers.

But it was the lack of any announcement around social care - both adults and children’s - that most demonstrated to attendees the disconnect of civil servants from the front line.  And the offer to end the pay cap for nurses with no mention of social workers was thought to send entirely the wrong signal about social work as a career choice, when social workers can make more money stocking shelves in supermarkets.  The discussion was tinged with irony given the report of the Competition and Markets Authority on the adult care market issues the previous day, though no-one really expected a response from the Chancellor before next year’s promised Green Paper.

Being an event in the north, largely for attendees from the north, the discussion also had something of a geographical flavour.  The drain of young people to London, the lack of investment in transport infrastructure compared with London and the south east (Crossrail was mentioned more than once), and the relatively few commercial investment opportunities, were all suggestive of a continuing north-south divide.  The infrastructure funding being made available to the combined authority mayors and the opportunities from HS2 were though to provide some balance, though the lack of proposals for east-west connectivity across the north remains a significant gap.

The focus of funding on mayors and combined authorities seems to be starting to cause some division in the sector.  The more the CAs benefit out of a limited financial pot, the more attractive it is to be part of that club, and the more tangible the benefits of doing a deal become.

Abdool Kara welcomes any feedback and can be contacted at Abdool.Kara@nao.gsi.gov.uk

Participants