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Autumn Statement 2014: Expert comment on the implications for local government

A number of key announcements, such as an additional £2bn for the NHS, investment in flood defences, and a revised road investment strategy have been well trailed. As has the need for an on-going period of austerity – the three main parties agree that it will continue well into the next parliament. Indeed the Chancellor, George Osborne, has previously indicated that austerity will be with us permanently, including a further 10% funding reduction to local government in 2015/16.

Having by and large successfully managed 40% spending reductions this parliament, local government is now facing - according to Local Government Association figures –  a £12.4bn funding shortfall by 2020 if funding reductions continue. 

The Chancellor today confirmed that the deficit has been halved, indicating we are half-way through austerity. A new Charter for Budget Responsibility will be published setting out the Government's commitment to spending reductions during the next parliament, and the Cabinet Office will publish a plan for £10bn of further efficiencies across government.  However, no further detail on where the axe will fall was made available.  With the NHS, education and international development having been thus far protected, it is to be expected that local government will face further spending reductions.

Paul Dossett, Head of Local Government at Grant Thornton UK LLP, commented: "Recent national fiscal events have not been happy occasions for local government, and local authorities will not have been expecting 'jam tomorrow' from the last Autumn Statement of this parliament. It is clear that the sector will face further spending reductions during the next parliament, but we will need to wait until the Spending Review that follows the May 2015 general election to find out how much. The Chancellor noted that the public's satisfaction of local government services has increased during the current spending review period, but it remains to be seen how long this trend will continue.

"Following the Scottish Independence referendum local government in England has been calling for increased devolution.  These calls reached a crescendo in the lead up to the Autumn Statement following the Chancellor's announcement last month on devolved powers for the greater Manchester combined authority.  Disappointingly, there were no further announcements today, but the Chancellor advised that his door is open to other cities who want to follow Manchester's lead, particularly if the authorities come to him with proposals that have cross-party support. We believe that greater devolution to local government, including fiscal devolution, is critical to the sector's future sustainability. Without fiscal devolution and the responsibility, ownership  and accountability that this brings, a meaningful renewal of local democracy and the connections of our communities to government in general will not take place.

"Small to medium-sized businesses are the engine room of the UK economy and are key to future growth, and I welcome the continued business rates cap of 2%  and the increased business rates rebate of £1,500 to small businesses."