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Autumn Statement 2022: reaction from the sector

Local Government Lawyer looks at the reaction of the sector to Chancellor Jeremy Hunt’s Autumn Statement 2022.

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Cllr James Jamieson, Chairman of the Local Government Association

“Local government is the fabric of the country, as has been proved in the challenging years we have faced as a nation. It is good that the Chancellor has used the Autumn Statement to act on the LGA’s call to save local services from spiralling inflation, demand, and cost pressures.

“While the financial outlook for councils is not as bad as feared next year, councils recognise it will be residents and businesses who will be asked to pay more. We have been clear that council tax has never been the solution to meeting the long-term pressures facing services - particularly high-demand services like adult social care, child protection and homelessness prevention. It also raises different amounts of money in different parts of the country unrelated to need and adding to the financial burden facing households.

“Councils have always supported the principle of adult social care reforms and want to deliver them effectively but have warned that underfunded reforms would have exacerbated significant ongoing financial and workforce pressures. The Government needs to use the delay announced today to ensure that funding and support is in place for councils and providers so they can be implemented successfully. We are pleased that government will provide extra funding for adult social care and accepted our ask for funding allocated towards reforms to still be available to address inflationary pressures for both councils and social care providers.

“The revised social rent cap for next year is higher than anticipated and councils will still have to cope with the additional financial burden as a result of lost income. Councils support moves to keep social rents as low as possible but this will have an impact on councils’ ability to build the homes our communities desperately need - which is one of the best ways to boost growth - and retrofit existing housing stock to help the Government meet net zero goals.

“Financial turbulence is as damaging to local government as it is for our businesses and financial markets and all councils and vital services, such as social care, planning and waste and recycling collection, and leisure centres, continue to face an uncertain future. Councils want to work with central government to develop a long-term strategy to deliver critical local services and growth more effectively. Alongside certainty of funding and greater investment, this also needs wider devolution where local leaders have greater freedom from central government to take decisions on how to provide vital services in their communities.”

Cllr Georgia Gould, Chair of London Councils

“Borough finances remain in a critical condition. Before today’s statement from the chancellor we estimated a £700 million shortfall next year for councils in the capital, which means a bleak future for many of the local services our communities rely on. 

“Council tax is not the answer to the inadequate funding we’re grappling with. Council tax rises during a cost-of-living crisis are extremely difficult for the struggling households we’re determined to support. But even if council tax goes up, it could never plug that £700m funding gap.

“Boroughs need proper investment from the government. Just as ministers worked in partnership with councils during the Covid-19 pandemic, we now require similar support in the face of the current economic emergency. We stand ready to work together in finding a sustainable solution that protects local services, helps Londoners through cost-of-living pressures, and secures the economic growth we all want to see.”

Steve Crocker President Association of Directors of Children’s Services

“On first reading, it is difficult to see any real recognition of the pressures faced by local authorities and schools within the Chancellor’s Autumn Statement. Additional funding for schools and both adult and children’s social care will help us to get through the winter but does not come close to addressing the ever-increasing funding gap in our budgets. The case for investment in children’s services has never been stronger, particularly if we are to achieve the reforms set out in the independent review of children’s social care. We are all seeing rising demand whilst children are presenting greater complexity of need, yet children are mentioned just four times across the entire published Autumn Statement.

“More and more families are experiencing hardship, or have reached crisis, and we know that there is a strong correlation between poverty, deprivation and involvement with children’s services. The impacts of the pandemic and cost of living crisis are already being felt across wider children’s services, including children’s mental health, early help and social care but we are yet to see a national commitment to address this urgent need.

“We must be ambitious for our children and families but at present we risk becoming a ‘blue light service’. Now more than ever we need to work with children and families who are at risk of poor outcomes at the earliest possible stage, but only with adequate long-term national investment can we continue to provide this vital support.”

Sarah McClinton, ADASS President, and Cathie Williams, ADASS Chief Executive

"We still need to read the small print, but with tens of thousands waiting for care and support, unpaid carers breaking down and staff quitting in droves, today’s announcement appears to provide some welcome relief and lessen some of the impact of the current crises ahead of what promises to be the most difficult winter any of us can remember.

"The next step is to develop a long-term, fully funded plan that provides the right support for older and disabled people, and unpaid carers, together with an adult social care workforce plan that complements the one announced for the NHS."

Jonathan Carr-West, Chief Executive of the Local Government Information Unit

“Today’s budget offered limited respite for hard-pressed councils. In a week when two of England’s largest local authorities have said they are facing a financial cliff edge – the message from the sector is clear. Well run councils will fail unless something changes.

“Additional money for social care would be welcome, but the vast majority of what was announced today is derived from delaying the Dilnot proposals and from increasing council tax flexibility. Both these measures simply kick the problem down the road. We’ve been doing that with social care for over a decade now and a regressive tax will hit the poorest the hardest and shift political liability from central to local government.

“This budget made it very clear that levelling up is well and truly back. But, the devolution deals announced today offer no promise of the necessary fiscal devolution. The commitment to explore single departmental-style settlements for the Greater Manchester and West Midlands Combined Authorities might take us in that direction, but that too is kicked down the road until the next Spending Review.

“Councils across the country are struggling to make ends meet today. The choice for the Government is whether it intervenes before or after local authorities go bust. This budget gives little cause for optimism.”

Phillip Woolley, Head of Public Sector Consulting at Grant Thornton UK

“The Chancellor did not, as many were expecting, bring down the spending cut axe on local government. Instead, he confirmed that the previously announced increases in the current Spending Round will be maintained for the next two years. Whilst this will provide some relief to the sector, the hard decisions look to have been deferred by the Chancellor until the next Spending Round in 2025/26. There was also no new funding announced for local government to reflect the impact inflation has had on budgets since the current Spending Round was announced.

“According to our analysis, the local government sector is facing a funding gap of c.£7.3 - £9 billion by 2025/26. Even with the referendum limit for council tax being increased, there will not be enough funding generated to fill the shortfall many councils are facing. If three quarters of all local authorities in England lift council tax to 4.99%, our data shows that it would reduce the sector’s budget gap by c.£2bn by 2025/26. Raising council tax by an unprecedented level in a cost-of-living crisis is a hard but arguably necessary political choice in the face of a significant funding shortfall.

“But the amount of funding this would generate for local authorities will also greatly differ across the country. For example, when comparing increases in Band D properties, an increase in Nottingham would generate an additional £114.48 per Band D property, which amounts to significantly more than what would be generated in Solihull - £88.45 per Band D property. It will also depend on whether individual councils utilise the increase, which is by no means certain.

“Support for social care, on the surface, seemed to be boosted, but only some of the headline funding is actually new money. Of the £2.7 billion additional funding announced for social care for FY23/24, £1 billion is new funding, the rest comes from both delaying Charging Reform and allowing councils to increase the adult social care precept as part of council tax. Whilst the additional £1 billion for next year is welcome, in percentage terms it is significantly below the rate of inflationary pressures every council is currently facing in delivering care to its residents, so could further increase the financial impact of delayed discharges on the NHS.

“The financial sustainability of many councils remains precarious, and there will be some very difficult decisions to be made when councils set their new budgets in February.”

Tonia Secker, partner and Head of Affordable Housing at Trowers & Hamlins

"Not much for affordable housing in the Budget Statement beyond the announcement of the 7% cap on social housing rents. Whilst that will inevitably result in cost increases to residents (albeit at a lesser level), an income deficit for social landlords – it will, however, on the Government's calculations, save it £630 million over the next 5 years. Comparable measures do not appear to be considered in respect of the significant amount of housing benefit support that goes to landlords in the private rented sector from the Exchequer. 

“The expectation that trailblazer devolution deals with Greater Manchester and West Midlands Combined Authorities will include housing powers and the potential for consolidated funding will be welcomed and has the capacity to support the Levelling Up agenda, but despite the commitment to continue to support that agenda, the scope of Investment Zones is being significantly scaled back to focus on a "limited number" of "knowledge-intensive growth clusters". That previously submitted expressions of interest will not be taken forward will inevitably be a source of frustration to those local authorities that devoted resource to their submission."

Peter Hardy, partner and Head of the Living Sector at Addleshaw Goddard

"Over half of England will soon be covered by devolution deals with local mayors. Will they be given full planning powers and the cash to enable locally-led regeneration projects or will these still come from central government?

"I'm not sure the government understands the nuances between different local authorities. The mayors are tuned into local strategic needs and cultural points in a way that no central government minister can be."

Samantha Grix, partner at Devonshires

“Setting the rent cap at 7% will come as a huge relief to Registered Providers and prevents a potentially apocalyptic scenario for some. RPs are facing a perfect storm of costs including fire safety and decarbonisation, so limiting rent increases to 3 or 5% would have been untenable for many. However, the higher cap will allow RPs a bit of headroom to ensure their viability and allow them to deliver the much-needed low cost housing they provide to this country.”

Kevin Bell, transport partner at Womble Bond Dickinson

"As someone who cares passionately about the key role that public transport plays in connecting and transforming our towns and cities, boosting our economic recovery and delivering even more education and job opportunities, it is positive to hear the new Chancellor of the Exchequer, Jeremy Hunt, confirm in his Autumn Statement that infrastructure remains a "growth priority" for the Government and that he will not be "cutting a penny" from capital investment budgets over the next two years.

“So the many large transport infrastructure projects that we initially feared could face the chop in order to fill the £60 billion black hole would appear, at first glance, to continue full steam ahead. HS2 to Manchester, the continued development of East West Rail and the promise to introduce the Northern Powerhouse Rail core network.

“But scratch beneath the surface of the announcements from the despatch box at lunchtime and we find out that, for example, the plan for Northern Powerhouse Rail is to revert to the watered down version delivered in the Integrated Rail Plan that was published this time last year. A network that will, admittedly, consist of a new high-speed line between Warrington, Manchester and Yorkshire and additional upgrades to existing infrastructure but which falls well short of former Prime Minister Liz Truss' promise from just over a month ago for a brand new electrified line from Liverpool to Hull, a new station in Bradford and even more besides. Rejoicing and relief one month. Wailing and gnashing of teeth the next. Critics of the Government's proposals will argue that, even in these difficult times, they do not go far enough to transform the North's rail infrastructure, which is needed for Levelling Up (remember that one?), and to deliver long-term, credible economic growth.

“And at the time of writing, we are still waiting to hear if the Government has any plans to fully deliver on its National Bus Strategy and provide a long-term funding package for bus services (with some vital bus routes facing a cliff-edge when current funding runs out in April 2023) as well as continuing to support and promote the benefits of light rail and tram systems in the UK.

“It certainly makes for interesting times in the UK transport and infrastructure sector as we look to deliver growth and stability on the one hand whilst balancing the books on the other."