William Eichler 28 November 2016

‘How the hell are we going to pay for social care?’

‘How the hell are we going to pay for social care?’ image

The chancellor’s first - and last - Autumn Statement has left those working in local government confused as to Whitehall’s intentions. Some of the major issues facing councils across the country - social care, business rates retention - were passed over in silence. Others, such as devolution, were touched on only briefly.

The initial reaction of the chief executive of the Local Government information Unit (LGiU), Jonathan Carr-West, captured the mood succinctly: ‘This was presented as an upbeat Autumn Statement, but between the lines there was nothing for local government to celebrate.’

Dr Carr-West’s primary concerns when I spoke to him last Friday revolved around the heavy emphasis on Whitehall and an overall lack of clarity on many issues relating to local government. The statement was, in his words, ‘a bit of a raw deal’ for councils across the country.

We began with the National Productivity Investment Fund (NPIF). This £23bn fund for investment from 2017-18 to 2021-22 is one of Mr Hammond’s flagship policies. The aim behind it, as the chancellor explained last week, was to target spending at areas ‘critical for productivity’, such as housing, research and development (R&D), and economic infrastructure.

The NPIF, which will be a central plank of the Conservative’s forthcoming industrial strategy, wreaks of central government. ‘It just all sounds a bit command and control,’ Dr Carr-West explains. He is concerned at how effective a national strategy will be for fixing local problems, particularly when questions of resource allocation are left vague. ‘How will the allocations be made?’ he asks. ‘Who’s going to decide what gets spent where? Who’s going to decide how it gets spent?’

Mr Hammond spoke about local enterprise partnerships (LEPs) and housing associations, but had little to say about the only democratically accountable organisations at the local level: councils.

This is a mistake, argues Dr Carr-West, both from a democratic perspective but also from the point of view of efficiency. ‘We know that its very hard for people to make national level strategic decisions from Whitehall that actually do the right thing on the ground because the needs are just so different in different places,’ he says.

The Autumn Statement may have been localist in its language, Dr Carr-West concludes, but in practice it was very London-centric. ‘It seems like the classic thing of central government thinking it must be the answer and that it is the only place that can grip the levers of power effectively,’ he says. ‘And there’s a long history of that not working.’

The chancellor’s announcement that ‘devolution remains at the heart of this government’s approach to supporting local growth’ also did not give Dr Carr-West much hope that the Tories were serious about localism. ‘The Government said devolution is still a priority, but there was no mention of that,’ he says. ‘He talked about extra money and extra powers going to Manchester on transport for example, but what about the rest of the country.’

He acknowledges progress has been made in major cities such as Greater Manchester and Liverpool, but he warns in other areas things are going off the rails. ‘What we’ve seen really struggle is devolution outside the cities, particularly in two tier areas, particularly in county England,’ he explains, pointing to recent problems with devolution deals in Norfolk and Suffolk and Greater Lincolnshire.

‘If we’re serious about that [devolution] agenda it needs a bit of TLC from Government or a bit of extra energy or at least a clear statement that that’s what we’re still planning to do and that just seemed absent,’ he argues. ‘It was all about the cities.’

In his response to the Autumn Statement, the chairman of the Local Government Association (LGA), Lord Porter, warned councils are going to find it ‘extremely challenging’ tackling the £5.8bn local government funding gap they will be facing by 2020. He called on Whitehall to ‘publish the Local Government Finance Settlement as soon as possible’, so councils will be able ‘to plan for the difficult funding decisions which lie ahead.’

Dr Carr-West was dismayed that Philip Hammond provided very little clarity on the question of local government funding. The former chancellor George Osborne announced during the last Autumn Statement that local authorities would be able to retain 100% of their business rates. The Department for Communities and Local Government (DCLG) consulted on how it would work and, Dr Carr-West explains, the sector was hoping to get some answers last Wednesday. But they didn’t come.

‘[100% retention of business rates is] how local government is going to be funded post-2020, four years away. That’s not a trivial issue,’ he says, exasperated. ‘We actually don't know how that’s going to work and that seems extraordinary to me. It seems extraordinary that you wouldn’t want to offer some clarity around that.’

Equally extraordinary was the lack of any mention of social care in the chancellor’s speech. The social care system faces a nearly £2bn funding gap next year, according to the health charities The King’s Fund, Nuffield Trust and The Health Foundation, and yet, along with business rates, it was not touched on in the Statement.

‘Here you have the two single biggest areas of uncertainty for local government: how we’re going to be financed and how the Hell are we going to pay for social care,’ says Dr Carr-West. ‘Not unrelated questions. These are the two big questions and nothing. Complete silence on both of them.’

Local government was not, however, ignored entirely. The chancellor laid part of the blame for projected weak economic growth at its door, a dig Dr Carr-West finds unacceptable. ‘His only flipping mention of local government was to give it part of the blame for a weaker economic outlook,’ he says. ‘It was outrageous!’

For Dr Carr-West, this last point was just rubbing salt into the wound. Not only did the Autumn Statement fail to address some of the most significant issues relating to local government, it also gave the sector a kicking while it was down.

‘It does feel very unfair that a sector that has consistently delivered the cuts demanded of it, instead of being praised is blamed for the weaker economic outlook,’ he concludes. ‘That feels unjust to me.’

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