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New Budget Freedoms announced for Local Authorities - no time to lose
Trowers Public Insight

New Budget Freedoms announced for Local Authorities - no time to lose

The Chancellor's Autumn statement included a commitment to allow Local Authorities to spend up to 100% of their fixed asset receipts (excluding Right to Buy receipts) on the revenue costs of reform projects.  At the time, the examples given were of projects which allow councils to deliver more for less – e.g. home improvements that can help keep older people from needing to go to hospital.

The draft guidance issued in December (with separate guidance expected for Police and Crime Commissioners and the Greater London Authority / Transport for London) shows the extent of the proposed flexibility - and the breadth of projects which it can be applied to.  These include the following from the (non-prescriptive) list which appears in the guidance:

  • Sharing back-office and administrative services with one or more other council or public sector bodies
  • Investment in service reform feasibility work, e.g. setting up pilot schemes
  • Collaboration between local authorities and central government departments to free up land for economic use
  • Funding the cost of service reconfiguration, restructuring or rationalisation (staff or non-staff), where this leads to ongoing efficiency savings or service transformation
  • Sharing Chief-Executives, management teams or staffing structures
  • Driving a digital approach to the delivery of more efficient public services and how the public interacts with constituent authorities where possible
  • Aggregating procurement on common goods and services where possible, either as part of local arrangements or using Crown Commercial Services or regional procurement hubs or Professional Buying Organisations
  • Improving systems and processes to tackle fraud and corruption in line with the Local Government Fraud and Corruption Strategy – this could include an element of staff training
  • Setting up commercial or alternative delivery models to deliver services more efficiently and bring in revenue (for example, through selling services to others) 
  • Integrating public facing services across two or more public sector bodies (for example children’s social care, trading standards) to generate savings or to transform service delivery.

The list shows that this is clearly intended to be a much more significant concession than was apparent from the original announcement – geared towards encouraging local authorities to invest in developing innovative solutions to save money and generate additional cash.

To give the announcement more weight, every council will need to prepare an annual efficiency strategy, listing projects taking account of the capital receipts flexibility and including a cost benefit analysis showing the expected savings.

The concession is currently only intended to apply until 31 March 2019 so Local Authorities wanting to use it will need to quickly identify assets which can be sold to provide the necessary capital receipts – and develop initiatives which can take advantage of the new flexibility.

Trowers & Hamlins LLP has advised a large number of local authorities on a range of innovative projects to save costs whilst preserving public services as well as initiatives to generate new sources of income.

To view the draft guidance, please click here.

For further information please contact:

James Hawkins
Helen Randall
Amardeep Gill


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