Heather Jameson 13 March 2018

Hammond offers little respite for council finances

Council finances were offered little respite in chancellor Philip Hammond’s Spring Statement today.

Revealing improved financial forecasts from the Office for Budget Responsibility, Mr Hammond said there was ‘light at the end of the tunnel’ for national finances.

Following the announcement of three-yearly business rate revaluations in the Autumn Budget, the statement brought forward the next revaluation - due in 2022 - to 2021.

The Government has also put forward its thinking on modernising the tax system to encompass digital businesses.

A letter from Oliver Letwin, the MP tasked with looking at delays in housebuilding, laid before Parliament and mentioned by Mr Hammond, said his review will ‘narrow’ to consider ‘why, once major house-builders have obtained outline planning permission to build large numbers of homes on large sites, they take as long as they do to build those homes’.

Chief executive of the LGiU think-tank, Jonathan Carr-West, said it was clear there would be no additional spending for local government before the autumn.

He said: ‘For councils that are facing an immediate and deepening financial crisis that could be a long wait. For some, it could be too late. And, of course, we still don’t really know how local government finance is going to work after 2020.

‘So councils are left struggling to balance the books on a day-to-day basis all while having no idea how many homes they will be able to build and services they will be able to provide beyond 2020.’

He added: ‘We need an urgent consultation on the future of local government funding - one in which all options are on the table, not just adjustments to the current system.’

According to OBR figures, productivity was stronger than expected. Growth for 2018 is expected to come in at 1.5%, slowing in 2019 and picking up ‘modestly’ for the following three years.

The budget deficit for the year is predicted to come in at £45.2bn, down £4.7bn from the November forecast.

Chartered Institute of Public Finance and Accountancy chief executive Rob Whiteman, said: ‘It was disappointing not to see further support for those sectors most at need.

'Given the scale funding pressures felt by councils, particularly around the provision of adult and children’s social care, it is crucial the Government begin making plans to ensure the sustainability of the sector. Much is riding on the promised Green Paper on adult social care, which is scheduled to be published this summer.'

He called for an ‘open and honest conversation’ with the Government over what services it expects councils to deliver given the level of funding they receive.

‘The suggestion that there might be additional resources in the autumn will not satisfy those public bodies struggling right now. And if growth continues at the current pace there will still be a growing disconnect between funding and service expectation.’

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