The details are still to be properly fleshed out, but the inclusion of local authorities in the Government’s Energy Bill Relief Scheme is good news and follows much lobbying from the sector.
The scale of energy price increases being faced by local government was similar to the horror stories from businesses, so the support will be gratefully received.
While this support is to be welcomed, inflationary costs from pay and materials continue to impact on services and regeneration projects and will still place extraordinary pressure on council budgets this winter.
One of the things our members are most worried about currently is certainty and the ability to plan for the future. In recent years we have seen consecutive single-year settlements with major reforms hanging over us for years now. The inflation crisis is making the situation significantly worse. So, while this support will welcomed, there will be questions about what happens when the six months covered are over – with there being no indication that energy prices will have fallen over that period. Without guarantees over a longer period of time, it will still be very difficult to plan for the coming months. In a recent survey our members forecast an average additional pressure in 2023-24 of £21.4m.
Energy inflation is a significant worry to local authorities but actually isn’t the largest single inflationary pressure. Having surveyed our members we know that additional energy pressures made up around a quarter of the inflationary pressure and while helpful, clearly this scheme will not cover all the increase our members have forecast. The largest area of forecast inflation is pay – the proposed pay settlement would add more than £1bn to local authority budgets this year – which for our members equates to more than £5m each. This is a huge sum that will place huge pressure on key services – support from government is clearly required.
Another key area of inflation concern is related to regeneration projects. Construction costs for material and labour have increased significantly and our members have warned that this has already resulted in many projects being reduced in scope or scrapped altogether. The ‘levelling up’ agenda is already hitting the breaks – unless support is delivered to get these projects back underway, delivery could be significantly delayed if not halted.
Cllr Sir Stephen Houghton, Chair of the Special Interest Group of Municipal Authorities (SIGOMA)
