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Budget response: Local Government

Paul Dossett, Head of Local Government at Grant Thornton UK LLP, commented:

“George Osborne announced his seventh budget as Chancellor today, the first Conservative budget in 18 years. He confirmed that deficit reductions totalling £37bn will be required over the life of the new Parliament, but only announced approximately half of these – with measures relating to welfare and to tax evasion and avoidance. Departmental spending cuts – including those affecting local government – will not be announced until this Autumn's Spending Review. So we have a few months to wait and see how accurate the LGA's forecast of £9.5bn funding reductions to local government over this parliament will be. The Chancellor did, however, confirm that no in-year departmental cuts will be as severe as any year in the last Parliament.  We believe the new Secretary of State will be more robust in his defence of local government spending than his predecessor.

“The Chancellor confirmed the additional £8bn of funding for the NHS over this parliament, that was announced during the general election campaign to support NHS England's Five Year Forward Plan. This is welcome but there are severe doubts as to whether the NHS can deliver the £22 billion of efficiencies which are part of that plan. The challenge of delivering these efficiencies will be much worse  should there be further cuts to social care and public health budgets as a result of the Autumn Spending Review. Protecting social care budgets is crucial to both NHS and local government financial sustainability.

“The Chancellor commented that English devolution has only just begun, announcing that further powers will be devolved to Greater Manchester including children's services, fire services and employment programmes.  Transport for the North has been given a £20m budget and it will be interesting to see if it can be as effective as Transport for London has been in improving transport infrastructure. Further devolution deals were also trailed for Sheffield, Leeds, Liverpool, the Midlands and Cornwall. We welcome empowerment to city regions and it pleasing to see that a non-metropolitan region is included in the Chancellor's list. County devolution is important both to help economies grow and make a statement that our rural communities are just as important to the future of this country as city regions. Devolving the power to reach a decision on Sunday trading was a nicely placed hospital pass .  The chancellor was careful to focus on the link between metro mayors and devolution.

“The £12bn of welfare cuts announced by the chancellor, including the reduction in household benefit caps and social housing rents, will be dependent on the economy growing to provide the jobs suggested by the Chancellor. If these jobs are not available to all localities, there will undoubtedly be increased pressures on local authority services at a time of further local government funding reductions.  The financial and social cost of homelessness remains a concern in many areas"