Autumn Statement 2014 - sector reaction

Local Government Lawyer rounds up the sector’s reaction to the Chancellor of the Exchequer George Osborne’s 2014 Autumn Statement.

Cllr David Sparks, chair of the Local Government Association

"Today's Autumn Statement spared hard-pressed local services from further bad news. The Chancellor has confirmed that local services will not face additional cuts next year, on top of those already announced. In doing so, government has acknowledged the huge contribution councils have already made to balancing the country's books, and the fragile financial position in which this has placed many local authorities.

"The commitment to multi-year budgets for local government is also good news for everyone who uses the services councils provide. Longer-term financial certainty is crucial to good quality, well run public services.

"By next May, government funding for councils will be 40% lower than it was in 2010. Behind these numbers we must not forget that it is individuals who have paid the price of funding reductions, whether it is through seeing their local library close, roads deteriorate or support for young people and families scaled back. Further reductions without radical reform will have a detrimental impact on people's quality of life.

"Extra money pledged to the NHS today will have to be spent picking up the pieces left by a declining adult social care system unless services provided by local authorities are properly funded. Adult social care is in crisis and desperately needs to be put on a sustainable financial footing.

"Following the new devolved powers announced for Greater Manchester, it is disappointing that devolution for the rest of England has not yet got off the ground. The Government has promised new devolved powers for Scotland, Wales and Northern Ireland but has failed to deliver for England. All parts of the country – from big cities to non-metropolitan areas – need greater freedom from Whitehall. This should include freedom to invest in the housing people need, without being hampered by a counterproductive Treasury investment cap.

"There is clear evidence and a consensus across the political spectrum that taking decisions on issues like transport, housing, skills and care closer to the people affected improves services and saves money. A much faster and more ambitious approach to devolution is urgently required if the local services which underpin people's daily lives are to survive the next few years.

"England can no longer afford for this to be a pilot project. For some areas, it's now devolution or bust."

Rob Beiley, partner at law firm Trowers & Hamlins

"Local authorities will be disappointed at the Chancellor's failure to address the housing revenue account borrowing cap, and will have to wait and see what the Elphicke review brings in relation to their role in meeting housing supply."

Cath Ranson, President of the Royal Town Planning Institute

“The promise of further cuts in expenditure is a concern given a recent National Audit Office reporting a 46% reduction in spending on planning and development services. We welcome in principle the new package of planning measures but will need to see the detail of what is proposed. We are ready and willing to work with all parties to ensure planning teams are properly resourced to achieve sustainable growth.”

Grainia Long, chief executive of the Chartered Institute of Housing (CIH)

“Today the Chancellor announced plans to reform stamp duty, which we have welcomed. It’s a sensible measure - the ‘slab’ system of stamp duty was very badly designed and as a result has been distorting house prices for many years. It may make home ownership more affordable for some people who have been struggling to save the deposit needed, especially in areas where prices have risen particularly dramatically. It probably will help to maintain momentum in the housing market and again, the clue as to why this might be considered important is in the OBR report: along with consumer spending, the housing market ‘has driven the recovery’ and it mustn’t be allowed to falter. As mortgage lending has increased, this has fuelled more spending. Regrettably, it hasn’t fuelled more house building. But surely the Chancellor is well aware by now that, by themselves, measures to stimulate demand don’t lead to more houses being built. Indeed CIH has previously flagged this up as one of the challenges of help to buy – stimulating demand does not always lead to stimulating supply and increasing demand without increasing supply can lead to pressure on prices.

“Fundamentally, if we want to make home ownership – and other tenures – more affordable in the long term we also need to tackle the underlying problem of supply. We are not building enough homes to keep up with demand, which means that millions of people are being priced out of a decent home, whether that’s to rent or buy. That’s why we welcomed some of the measures in yesterday’s National Infrastructure Plan. CIH has been calling on the government to recognise housing as a critically important form of infrastructure for some time. 

“However, the Autumn Statement should have been an opportunity to recognise not only that housing supply is half what it ought to be but that it won’t meet everyone’s needs as long as we keep cutting the number of low-rent homes. Any significant change isn’t going to be achieved by extending the Affordable Homes Programme to 2020, as Danny Alexander announced yesterday as part of the National Infrastructure Plan, because the whole programme is now predicated on ‘affordable’ rent. As I have said before, we also need more homes for social rent so that people struggling on low incomes can afford a decent home. Affordable rent has a role to play but it doesn’t work for everyone - as it can be up to 80% of market rent it is simply not affordable for many people, especially in higher value areas up and down the country.

“Yesterday CIH joined organisations including London Councils, Shelter, the National Housing Federation and Centre for Cities in writing to the Chancellor to urge him to relax restrictions on local authority borrowing to enable them to build more, at low prices and at low rents. Allowing councils to borrow more would mean that they could build 75,000 new homes over five years, creating 23,500 jobs and creating £5.6bn of economic activity.

“Instead, the National Infrastructure Plan included a pilot project which will involve the state commissioning housing directly. On the face of it, this is a welcome development. Earlier this year I called on the Government to set a national target for house-building, and as we have pointed out, the only time when we have built anywhere near the number of homes we need in recent history has been when the Government has played a direct and active role in providing new homes.  o the recognition that we need radical solutions, and the idea of the government acting as a ‘backstop’ if the industry is not delivering the level of supply we need is to be welcomed. But there is another part of the state (local government) that already does this job and is champing at the bit to do more – why not give them the freedom to deliver?”

Liz Peace, chief executive of the British Property Federation

“For the sake of business competiveness and Government efficiency the business rates system needs to change. We need a system that is more responsive, both to changes in the economy and to the relative position different businesses find themselves in.


“Basing a property tax on nine-year-old valuations is simply unfair and inefficient, and other countries have shown that with the use of technology you can design a far more responsive system. The compounding effect of annual RPI increases is also meaning that a higher proportion of taxation each year is coming from business rates, sucking the blood from our high streets and eroding many other businesses’ competitive edge.


"Undertaking a root and branch review of the system is a big decision which many politicians have shied away from, and it makes today's announcement particularly welcome. We hope it is no-holds-barred and will deliver something fit for the 21st century, and one that benefits all sectors of the economy. We look forward to making a positive contribution on that basis.”

Brigid Simmonds, chief executive of the British Beer & Pub Association

“I am very pleased to see that small business rate relief has been extended for a further year today. The increase in the retail relief to £1,500 is more good news, that will benefit 64% of pubs. Overall, over 70% of pubs will receive retail relief.

“For pubs, the current Business Rates regime makes up ten per cent of costs. As well as getting bills down, we need to make it easier for pubs to appeal their rates bills and make the system more responsive to changing business conditions. The Government is certainly giving increasing attention to this important issue for pubs.

“I also welcome the removal of National Insurance payments for apprenticeships for those under 25. The pub industry can create many jobs and careers for young people quickly, with around 45 per cent of the country’s 600,000 pub employees under 25. Making it easier to create more apprenticeships is good news.”

Richard Threlfall, UK Head of Infrastructure, Building and Construction at KPMG


“City leaders across the country will be drowning their sorrows tonight after the Chancellor offered warm words but nothing of substance on devolution. It is deeply disappointing that the Government has failed to bring forward any proposals for fiscal devolution to England’s major city regions, as many had hoped.


“Compared to other countries, the buying power in the hands of UK local government is almost pointlessly small. Without a greater degree of control over local taxes all talk of devolution, investing in our city regions, and rebalancing the UK economy is just hot air.”