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Autumn 2015 Spending Review - Impact on Local Authorities

Autumn 2015 Spending Review - Impact on Local Authorities

Commentary by Helen Randall and James Hawkins (Public Sector Commercial)

Rate Support Grant and Business Rates

  • Phasing out Rate Support Grant to Local Authorities will result in a seismic change for local authority funding which will require LAs to be even more innovative to establish viable self-sufficiency. 
  • Business Rate Reform – allowing Local Authorities to keep the business rates they collect (and cut rates to boost growth) will provide more freedoms but any power to increase rates only applies to elected mayors – and must be spent on agreed infrastructure projects.  The system of top ups and tariff systems to redistribute income will remain but no further details have been published.  The additional freedoms will come with additional responsibilities being devolved to local authorities.
  • Additional funding could drive innovative new projects to drive economic growth and create new jobs.

Health and Social Care

  • 2% social care precept-opportunities to fund new forms of service delivery and invest in social care including potential spin-out and care trading companies.
  • £1.5bn invested in Better Care Fund-more opportunities for LAs to take the lead in innovating social care with health.
  • Additional funding to meet cost of introducing the Dilnot reforms not expected to arrive until 2019/20.

Devolution

  • Confirmed funding of £12bn for the Local Growth Fund including creation of 26 new Local Enterprise Partnerships.   New tax freedoms for Northern Ireland and Wales.

Focus on Local Authority Assets and disposals

  • Ability to retain 100% of receipts from LA asset disposals to fund qualifying "reform projects" - LAs will want to review the time limits and other restrictions carefully and avoid a firesale of assets which limits their ability to drive self-sufficiency through more innovative development opportunities.  LAs will need to comply with general obligations to achieve best consideration-potential for property rationalisations and asset-backed joint venture vehicles.  Details of the new scheme are expected in December.
  • Local Authorities will need to comply with an updated Transparency Code requiring them to record details of land and property assets in a consistent way.  This is likely to pave the way for further intervention in Local Authority management of its assets including a strengthened Right to Contest – allowing local communities to challenge how LAs use their land and property (not just property that is empty or under-used).
  • Support for Social Impact Bonds-local authorities should lead community outcomes and set the pace by setting policy and driving procurements.  Areas of Government focus include homelessness, poor mental health and youth unemployment.
  • Co-location of job centres with LA buildings – could be combined with estate rationalisation projects and integration with other services and property rationalisations.

Education

  • Government commitment to end LAs' role in running schools - increasing academisation may lead to spin-out of LA back office schools support.  Note further Government consultation expected on policy and funding proposals in 2016.
  • £23bn investment over 5 years to open 500 free schools, provide over 600,000 additional school places; rebuild and refurbish over 500 schools and address essential maintenance needs - programme will allow a significant boost to the schools estate.
  • Change in the national funding formula is likely to impact adversely on areas currently benefiting from a higher rate.

Other Public Sector

  • National Parks' funding maintained.
  • £1bn funding for 9 new prisons (5 during this Parliament).
  • Police budget – funding protected – new powers for P&CCs-need better legal powers to support innovative joint ventures and a wider remit to contribute to other parts of the public agenda.
  • Funding for merger of public offices.

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