Mischief makers looking for split between the Prime Minister and the Chancellor of the Exchequer have relied on the grammar. Earlier this month, Theresa May talked about austerity in the past tense. She said:
“A decade after the financial crash, people need to know that the austerity it led to is over and that their hard work has paid off.”
Yet three weeks later, it’s back in the present tense. Philip Hammond in his Budget speech announced:
“I can report to the British people that their hard work is paying off and the era of austerity finally coming to an end.”
Certainly many households have experienced austerity with wages falling in real terms. But has the state really experienced it? Most of us would define have a huge debt and adding to each year with massive borrowing as profligacy.
Another measure would be whether state spending has been cut. It has “in real terms”, but only by a very small amount overall. In 2009, the state spent £633.8 billion. In this financial year, it is due to be just £800.4 billion. If you take inflation into account, that is a very slight cut. It would have been £826 billion if it had gone up in line with the general rise in prices. So spending has been trimmed by around three per cent in total – over nearly a decade.
But that modest cut has not been evenly applied. Some spending items have risen above inflation – pensions, the NHS, Overseas Aid, contributions to the EU, and debt interest. That has meant that for others the cuts has been sharper – and local government has been in that category. Putting an exact figure on it is a bit tricky for various reasons. For instance, if a school converts to being an academy it is funded directly from the Department of Education rather than the money going via a local authority. So notionally, that appears as a cut in council budgets – although it isn’t anything to do with “austerity”. Then, to give an example going in the other direction across the balance sheet, we have the billions for public health spending – that used to be allocated to the NHS (and was largely wasted), and is now allocated to local authorities (and is still largely wasted). But councils have had to save real savings in recent years, and it looks as though that pressure will no longer apply.
Lord Porter, Chairman of the Local Government Association says:
“Today’s Budget shows the Government has started to listen to the LGA’s call for desperately-needed investment in our under-pressure local services, but falls short of what we need in the long-term. Councils were at the front of the queue when austerity started so local services should be at the front of the queue if it is coming to an end.
“The LGA’s Budget submission highlighted the severe funding pressures facing councils in 2019/20. The Chancellor has acted to help tackle some of this immediate funding crisis with £650 million for social care which provides a financial boost for some of our local public services.
“While this funding will ease some of the immediate financial pressure facing councils and our local services, it is clear that this cannot be a one-off. Today’s funding is a start, but the real test will come in the Spending Review next year.
“Local government in England continues to face significant funding gaps and rising demand for adult social care, children’s services and homelessness support will continue to threaten other services our communities rely on, like running libraries, cleaning streets and maintaining park spaces. Councils also continue to face huge uncertainty about how they will pay for local services into the next decade and beyond.”
There were also announcements about planning rules and Business Rates. Among the pressing concerns are that we have too few homes and too many shops. So the housing shortage has resulted in high rents and pushed home ownership beyond reach even for many on above average earnings. Yet a walk along local high streets sees empty shops with their windows boarded up. Liberalising the planning rules could help with both problems. The Chancellor said he would “facilitate redevelopment of under-used retail and commercial areas into residential. At one and the same time helping with the housing challenge and delivering much needed footfall to high street businesses.” So the Government “will consult on how modernisation of the Use Classes Order.” That is very sensible. But it is also frustrating that councils aren’t doing more to make their planning policies more flexible. Instead, it sounds as though the Government will order them to do so. Not a happy outcome for those of us wishing to champion the cause of localism.
With regard to Business Rates, the Chancellor said:
“I know that many small retail businesses are struggling to cope with the high fixed costs of Business rates. Since 2016 we have introduced business rates relief measures worth £12 billion and many of these reliefs will have benefitted High Street businesses. But today I can go further: At the next revaluation in 2021, rateable values will adjust to reflect changes in rental values. But I want to help retail businesses now. So for the next two years, up to that Revaluation, for all retailers in England with a rateable value of £51,000 or less, I will cut their business rates bill by a third. That’s an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes.”
That is welcome. Although it is more in the spirit of the “quick fix”. While shopkeepers coping with their accounts will have been pleased, it may be that the planning changes are more relevant to the longer term challenge.
Anyway, for councillors used to complaining, there is a cause for cheering about the money – perhaps not three cheers, but one or two cheers. However, they should beware the dull section about the “Use Classes Order”. Localism might be regarded as nice idea. Yet the patience at Westminster is not unlimited. If councillors can’t make the effort to lift planning obstacles to delivering new homes, then they can expect to be forced to do so.