Spending Review: Hokey cokey with the chancellor

Councils face a social care funding gap and the collaboration needed to tackle it will require letting go of vested positions as well as the harnessing of all resources and a spirit of generosity, writes Mark Cook.

In, out, in, out, shake it all about: The government’s programme of funding reform and devolution for local government gathered further pace with this year’s Autumn Statement and Spending Review.

For councils, it means the prospect of more resources in some respects, and also less in other ways. Fundamentally, this will require getting in tune with the government’s economic strategy for councils and the state of fiscal independence that they will have to strive to achieve by 2020.

The chancellor had his own moment of “turn around” with tax credits, but it will be interesting to see which councils will be doing their own frantic spinning and which will be plotting a clear path to a new equilibrium.

All is not healthy with Social Care, nor will it get better

Councils responsible for social care will now be able to levy a social care “precept” of up to 2% on council tax. We are told that if councils make full use of the levy, it could raise up to £2bn a year by 2019 to 2020.

The government will also increase the Better Care Fund, in pursuit of the health and social care integration agenda. However, the precept is discretionary and not all councils will be willing, or able, to implement it.

For some, the long-term reduction in revenue support grant will imperil their viability, so we do not expect this to be the final resting place for the area of services where councils most struggle to control demand.

Business rates autonomy

Uniform business rates will go, so that, by the end of the current Parliament, councils will be retaining 100% of business rates revenues.

Councils will also have the power to cut business rates and make their area more attractive to businesses.

In addition, combined authorities with elected mayors will have additional powers to raise business rates provided they fund specific infrastructure projects supported by the local business community.

This means that every council will have to have its own economic development plan, in which it will be well advised to collaborate across the tiers and with its neighbours, if the full benefits of growth are to be realised.  That willingness to work together is still not evident everywhere.

Selling off capital assets – is that really sensible?

The announcement by the chancellor that councils will be able to keep 100% of their capital receipts (excluding Right-to-Buy properties) may act as the incentive that the chancellor wants for councils to release land to provide new housing or regeneration.

However the capital receipts from such asset disposals will have to be used to fund qualifying “reform projects”. Further details from the DCLG will be released in December, which councils will need to consider first.

Councils are, however, also likely to consider that the retention of assets in order to generate revenue streams may actually be a better option for safeguarding their longer-term viability, possibly in partnership with suitable partners, both in the social housing and the private sectors.

We are currently very active in this area, and we will be advising how the government’s 100% capital receipts policy can be further enhanced in the context of such arrangements.

Devolution by evolution

With further devolution of government functions announced for the Greater Manchester Combined Authority, and the recent deals in Liverpool and the West Midlands, we see more combined authorities sweeping across England and more powers being transferred – all to be exercised by an elected mayor holding the loop between participating councils and local LEPs.

With new fundraising powers for them, we should not underestimate the power of regional government through the back door, and the possible demise of two-tier local government at a county/district level. The revolution goes on, spurred by Comrade George.

Education

The chancellor plans to phase out that great institution – the LEA, but this will have consequences for those councils that still maintain good relationships with their local schools.

How will they form constructive relationships with academies and MATs, working together in delivering local social welfare? And will there be more spin-outs of education support services?

If so, we have advised on a number of models and we know what has worked so far. It may be too late to do much with what remains in-house, so the way forward is to create new collaborative partnerships.

Knees bent arms stretched

Councils will have to do some interesting manoeuvring to respond to the latest challenges that face them.

Whilst it is good that we have a pothole fund to help keep local traffic flowing, the gap in funding for social care is what will keep many awake in the next year, including those individuals and families who need support.

The collaboration required to address this will require letting go of vested positions and a real desire to harness all resources, in a spirit of generosity in very difficult circumstances. That, for us, is at the crux of what local government has to mould for it to have a future that we all so believe in.

Mark Cook is a partner at solicitors Anthony Collins. This article first appeared on the Anthony Collins website.

Photo (cropped): Gareth Milner, Flickr.