Long before the last warmth from our spectacular summer had past, local government Chief Executives were bracing themselves for the cold wind of financial constraint and impenetrable spending decisions. This year’s Autumn Statement merely reiterates the formidable challenges that lie ahead for providers of local services.
The Chancellor’s statement points to a flat lining economy. A shrinking of 0.8% in GDP this year, and a small predicted increase next means its impact will be felt over the long term. Public expenditure continues to be squeezed with 1% spending cuts in 2013/14 and 2% the year after. While a further £10 billion needs to be found in a spending review next year.
The underlying weakness of the UK economy means that the spending restraint many felt would now be nearing its end, will now continue until 2017 and probably beyond. For example, if the work of the Social Market Foundation and RSA is correct, the Government will be seeking an additional £22billion of extra cuts or tax increases, over and above the £26billion implied in the 2012 budget. If other Departments continue to be more successful in arguing for protection, the DCLG budget in 2017/18 could be almost half what it was in 2010/11.
Let us accept that continued reductions in public expenditure are inevitable. If we saw substantial investment in infrastructure or a different approach taken to austerity, their effect would still be less than transformative in the short term. Public spending will remain under the cosh for the foreseeable future.
Let us instead try to return to a debate about sustainability, and what’s required to protect vital services where possible, and enable public services to adapt to the fiscal environment.
Difficult decisions will have to be managed with tremendous skill and care by local government members and officers. With proper preparation and considered judgement, they will seek to minimise the inevitable impact on local services. This is why greater stability in local funding is vital. Instability and late decisions just increases risk, and with risk comes cost. The late timing of this year’s local government settlement creates uncertainty, and the capping effect of council tax referenda leaves councils working with one hand behind their backs.
The singling out of local government for disproportionate cuts does not meet any test of fairness. I suspect it may also be counter-productive. DCLG should be arguing that cuts in the preventative services of local government will simply add further pressure to welfare and health, and limit our ability to stimulate local growth. Councils have protected services to the most vulnerable but also play a vital role in promoting their local economies. If services such as highways, planning and economic development are squeezed, economic growth will prove ever more difficult.
The current financial climate should herald a dramatic increase in collaboration with the potential to lead to a very different public service landscape. Flexibility in the budgets of local public services creates opportunities to put resources to best use. Our Secretary of State, Eric Pickles, has been quick to champion the small number of community budget pilots and their potential to transform public services. If they have such potential, we need to push them further and faster.
Through cold winters many residents rely heavily on effective local services. During this recession, that demand has only increased. We need to ensure that the sector has the powers and stability to act. We also need to retain and support talented people with the commitment and imagination to deliver innovative responses. While an official’s advice may sometimes receive a frosty reception, policymakers need to recognise that good public sector managers are their greatest allies.