Budget roundup: slim pickings for local government
0Chancellor George Osborne’s 2014 budget was dominated by reforms on personal pensions and savings, along with “beer and bingo” tax breaks. But which other measures are likely to affect the finances of local government? Room 151 takes a look.
Main announcements affecting local authorities:
– Public Works Loan Board (PWLB) limit: The government will take the legal powers needed to increase the current PWLB lending limit of £70 billion to up to £95 billion in future to enable local authorities to continue to borrow from the PWLB. December’s National Infrastructure plan allocated nearly £800 million of borrowing at the Public Works Loan Board project rate to Local Enterprise Partnerships in partnership with local authorities in 2014-15 and 2015-16 as part of growth deals.
– Greater Cambridge growth deal: A “gain share” deal with Greater Cambridge, providing £100 million over 5 years (2015-16 to 2019-20) to fund local infrastructure. This agreement could be worth up to £500 million over 15-20 years, dependent on the economic impact of the investments.
– Right to Build: The government will consult on creating a new “Right to Build”, giving custom builders a right to a plot from councils, and a £150 million repayable fund to help provide up to 10,000 serviced plots for custom build.
– Enterprise Zones: Business rate discounts and enhanced capital allowances will each be extended by three years as an incentive for new and expanding businesses to locate in Enterprise Zones.
-Garden cities: Ministers will publish a long-delayed prospectus by Easter 2014 setting out how interested local authorities could develop their own, locally-led proposals for bringing forward new garden cities. The government will also form an urban development corporation, in consultation with local MPs, councils and residents, to deliver a new garden city at Ebbsfleet, Kent.
– Regeneration: The government will establish a £150 million fund to kick start the regeneration of large housing estates through repayable loans, helping to boost housing supply. Bids will shortly be invited from private sector developers, working with local authorities on estates that might be able to benefit.
– Property disposals: The Government Property Unit will increase its work with local areas on better use of public sector assets, linking in with Growth Deals and building on the Strategic Land and Property Review.
– Potholes: an extra £200 million, across the UK, to set up a potholes challenge fund. This emergency funding set aside by government will allow local authorities to repair up to 3.2 million potholes following the severe weather, the Treasury said.
– Education: The government will allocate £350 million to increase the per-pupil school budgets of the least fairly funded local areas in 2015-16.
Reaction from the sector
Local Government Association chairman Merrick Cockell:
“While this Budget has not brought further cuts for local government, it has not changed the fact that the next two years will be the toughest yet for people who use and rely upon the services which councils provide.
“By next year, council budgets will have been cut by 40 per cent from where they were at the start of this parliament. As the economy improves, people will increasingly start to question why councils are having to reduce and withdraw from providing the services that underpin their daily lives.”
Paul Dossett, head of local government at Grant Thornton:
“In the run up to the Budget, sector bodies, such as the LGA, the Core Cities Group and the County Council Network, all called for greater certainty on future funding to support effective and sustainable strategic planning. The provision of this certainty was absent in the Chancellor’s speech today.
“There will of course be some trickle down impact as a result of the increased infrastructure spending announced by the Chancellor, but the long term outlook of local government revenue funding remains highly challenging, and the resilience of some local authorities remains uncertain.”
