Andrew Jepp 08 November 2016

Autumn Statement – Councils looking for chancellor to steady the ship

All eyes will be on Philip Hammond on 23 November, when he makes his first Autumn Statement as chancellor of the exchequer. But what will council chiefs be hoping to hear in the Statement, and why?

One thing’s for sure: there is no one specific council chief wish list. A recent report from Zurich Municipal (ZM) identified a staggering level of polarisation between local authorities around the country, driven by six years of austerity.

Based on in-depth interviews with council CEOs across the country, the Worlds Apart report found that the local government landscape can be characterised as the ‘haves and have nots’. While many councils are becoming bold commercial entities and driving forward their communities, some are facing serious funding black holes, which they claim is even putting social cohesion at risk. The uncertainty created by the UK’s vote to leave the European Union could lead to further polarisation.

Growth – and the ability to deliver essential services – will also be preying on CEOs’ minds. With councils set to become entirely dependent on business rates and council tax for their income by 2020, they will also become much more vulnerable to any downturn in the economy. According to ZM’s Worlds Apart report, the new funding model is worrying many council chiefs, with one describing it as an 'impossible dream'.

The Brexit vote is making the situation even more delicate. The uncertainty around the forthcoming negotiations could weaken the economy, tipping struggling councils over the edge into financial failure. As such, council chiefs will be looking for the chancellor to use his statement to inject some stability and reassurance into the economy by announcing pro-growth measures.

Equally high on many councils’ agenda will be the extent to which existing EU Structural and Investment Fund allocations will be honoured. Whilst local authorities will have welcomed the chancellor’s assurances that all such projects will be guaranteed until the UK ceases to be a member of the European Union, there remains some uncertainty over whether the Government will honour funds allocated up to 2020. Many councils benefit heavily from this funding and its uncertain future could lead to councils delaying projects to improve their services or boost their resilience, or alternatively pushing ahead and then finding that funding dries up.

Local government chiefs will therefore be eager to hear more from the chancellor on how the process for applying for funding for vital projects will work after Brexit, and how much is going to be in the pot. Infrastructure investment is another area of interest. The chancellor used his Party Conference speech to announce that his Autumn Statement will reveal an increase in spending on targeted infrastructure – particularly in transport and housing. This investment will have clear economic benefits to local areas and will be welcomed by councils. However, CEOs will be eager to learn more about which projects and areas will benefit from this funding.

In summary, council chiefs will be looking to the chancellor to steady the ship. Ever since 2010, most councils have been highly effective in dealing with the challenges posed by austerity, tightening their belts and delivering essential services with less resources. The uncertainty created by Brexit is set to pose further challenges, and local authorities should ensure they have robust plans in place to minimise and mitigate against risks that this might pose.

Whilst the chancellor is expected to deliver some positive news, turbulence could lie ahead.

Andrew Jepp is CEO of Zurich Municipal

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