No one could have missed that the Conservative Chancellor, George Osborne, would be officially announcing the Comprehensive Spending Review headlines today.
VB isn’t going to attempt to cover the details and potential impact of these – National news organisations will be attempting to do that.
We’re just going to bring to your attention the items that we’ve found that are likely to have a local impact.
We know that there’s loads of it, but we wanted to include all that might be relevant – hopefully you’ll find it helpful.
Executive Summary
Reform
- localising power and funding, including by removing ringfencing around resources to local authorities and extending the use of personal budgets for service users;
- increasing diversity of provision in public services through further use of payment by results, removing barriers to greater independent provision, and supporting communities, citizens and volunteers to play a bigger role in shaping and providing services;
- improving the transparency, efficiency and accountability of public services.
As a result, the Spending Review: provides a settlement for local government that radically increases local authorities’ freedom to manage their budgets, but will require tough choices on how services are delivered within reduced allocations.
PFI
1.17 To strengthen the spending framework, the Government is transferring responsibility for the revenue costs of local government Private Finance Initiative (PFI) projects from local government to the sponsoring department to remove perverse incentives for projects to be delivered through PFI.
1.21 These priorities are underpinned by radical reform of public services to build the Big Society where everyone plays their part, shifting power away from central government to the local level as well as getting the best possible value for taxpayers’ money.
Regional growth
1.37 Local Enterprise Partnerships will provide strategic leadership in their areas to set out local economic priorities, and play a pivotal role in helping rebalance the economy towards the private sector.
1.38 A White Paper on local growth will set out the Government’s strategy for ensuring that all places benefit from sustainable economic growth. A central part of this will be ensuring that growth is driven by local businesses and communities, as well as providing the means and incentives to allow local communities to benefit directly from economic development in their area.
Broadband
1.39 Advances in information and communications technologies have driven productivity improvements across the private and public sectors. In order to ensure all regions can benefit from these potential gains, £530 million will be invested over the Spending Review period to support the UK’s broadband network and to incentivise the roll out of superfast broadband in areas that the private sector would not otherwise reach.
Structural reforms
1.46 – The Government is reforming planning. The Localism Bill will ensure that the planning system both works for sustainable growth and is responsive to the needs of local communities. As part of these wider reforms, there will be a new presumption in favour of sustainable development;
Public service reform
1.77 The Spending Review sets a clear direction for reform, focused on shifting power away from central government to the local level – to citizens, communities, and independent providers, so they can play a greater role in shaping services. Together these principles help build a society where everyone plays their part – the Big Society. This reform agenda is underpinned by the Coalition principles of freedom and responsibility:
- increasing freedom by localising power and funding, and changing how decisions are made. Local people, communities, and frontline staff understand their local priorities and problems better than central government. This makes them better placed to allocate scarce resources and shape services. The Government’s reforms will dramatically simplify funding to local authorities, put spending power in the hands of people, shift accountability to the local level and cut away regulations and red tape; and
Localising power and funding
1.79 The last decade has seen a significant increase in burdens, regulations and targets that has stifled innovation and freedom. The Government will give powers back to local areas, frontline staff, communities, and individuals.
1.80 In order to free up local areas, funding to local authorities and delivery bodies will be radically simplified, giving them greater choice over how to use their money to meet the needs of local people. The Spending Review announces that:
- the Government will devolve significant financial control to local authorities. Ringfencing of all local government revenue grants will end from 2011-12, except simplified schools grants and a new public health grant. The number of separate core grants, set out in Chart 1.4, will be radically reduced from over 90 to fewer than 10, excluding schools, police and fire. More than £4 billion of revenue grants will be rolled into formula grant;
- community budgets will be established in 16 local areas to pool departmental budgets for families with complex needs, and rolled out to all local areas over the Spending Review period; and
- the New Homes Bonus will give local authorities clear financial incentives to ensure that local communities benefit from new housing and economic development in their areas.
1.81 This builds on measures already announced, including reducing the number of regulatory bodies and giving local authorities a universal power of competence. New powers to implement Tax Increment Financing will also be detailed in a forthcoming White Paper on local growth.
1.85 These reforms supplement the Government’s measures to increase transparency and make services properly accountable to local people, including: the new Transparency Framework for central government; publication of central and local government spending and contracts online; directly elected police and crime commissioners; and, subject to local referenda, new elected mayors in the 12 largest cities.
1.89 As well as new opportunities and rights, the Government will assist new providers by improving access to the resources they need. The Spending Review announces that:
- the Government will direct around £470 million over the Spending Review period to support capacity building in the voluntary and community sector, including an endowment fund to assist local voluntary and community organisations.
Department for Education
2.7 Parents, teachers and community groups will be supported to establish Free Schools outside of local authority control to improve standards for all children, regardless of their background.
Department of Health
2.14 Social care plays a vital role in helping to keep people healthy and independent. It also supports some of the most vulnerable people in society. The Spending Review therefore makes available sufficient resources for local authorities so that they do not need to reduce access to services, and can fund new approaches that improve outcomes for those receiving social care:
- the current DH grant to local authorities for social care, the Personal Social Services grant, will increase by £1 billion pounds in real terms by 2014-15. To reduce administrative burdens and increase flexibility for local authorities, this grant will be merged into local government formula grant; and
2.15 This funding will also enable local authorities to deliver the necessary efficiency savings, reforms and service improvements that will release savings and put social care services on a stable footing for the entire Spending Review period.
Department for Transport
Bus subsidy will be reduced by 20 per cent and local government resource grants by 28 per cent.
2.28 Greater accountability at both local and national levels will drive improvements in costs, efficiency and value for money. For example:
- reducing bus subsidies paid directly to operators by 20 percent will save over £300 million by 2014-15. The Government will also work with bus operators and local government to examine smarter ways of administering this subsidy to get better results for passengers and taxpayers;
- local government resource grants will be reduced by 28 per cent, while the Government will simplify the number of grants to give local authorities more control and greater flexibility in how they spend this money.
Department for Communities and Local Government
2.29 The Department for Communities and Local Government (CLG) settlement includes:
- a programme to deliver up to 150,000 new affordable homes over the Spending Review period accompanied by major reforms;
- reforming the council housing finance system so local authorities have greater control over their own finances, and can reinvest to meet local housing need;
- reforming the planning system and introducing a New Homes Bonus to support economic growth and increase housing supply; 48 Spending Review 2010
- reducing CLG’s overall resource budget by 33 per cent in real terms by 2014-15, through reducing the size of the department and its Arms Length Bodies. Alongside this, the department is devolving over £1.6 billion to local government. This means the reduction in the department’s resource budget will be 51 per cent in real terms by 2014-15; and
- a 13 per cent real terms reduction to fire resource expenditure. This will require the Fire and Rescue Service to modernise, increase efficiency and deliver workforce reform.
Supporting long term growth
2.30 To encourage private sector enterprise and economic growth, CLG will contribute £890 million to the £1.4 billion Regional Growth Fund by 2013-14 (see Box 2.1). The fund will invest in projects and programmes with significant potential for growth and employment, and will in particular support those areas and communities that are currently too dependent on the public sector to make the transition to sustainable private sector led growth and prosperity. Alongside this, CLG will make more effective use of European Regional Development Funding and reinvest revenue from its assets.
2.31 The Government will increase housing supply by reforming the planning system so it is more efficient, effective and supportive of economic development. In addition, it will introduce a New Homes Bonus that will directly reward and incentivise local authorities and local communities to be supportive of housing growth, equivalent to matching the additional council tax from every new home for each of the following six years. It will also reduce the total regulatory burden on the house building industry over the Spending Review period.
Fairness
2.32 Funding for services that support the most vulnerable in society will be relatively protected, with provision for Disabled Facilities Grants rising with inflation and over £6 billion funding for the Supporting People programme over the Spending Review period. Also, reform of the council housing finance system will build in the resources needed to carry out future disabled housing adaptations required in the council housing stock.
Reform
2.33 Social housing will be reformed to provide a more tailored response to individual need at lower cost (see Box 2.2). Investment alongside this reform will deliver up to 150,000 new affordable homes by 2014-15. Meanwhile, investment via the Decent Homes programme will continue to improve the existing social housing stock.
2.34 CLG’s overall resource budget will reduce by 33 per cent in real terms over the period. Within this, CLG will devolve £1.6 billion to local government. This means the reduction in the department’s resource budget will be 51 per cent in real terms by 2014-15.
2.35 CLG will make reductions of 42 per cent in real terms on administration costs. This will be achieved through the closure of the Government Office network, reducing the number of Arms Length Bodies by 17 and reducing the size of the department. As a result of this settlement, programmes including the Working Neighbourhoods Fund, Growth Area Funding and the Thames Gateway programme will end, in order to rationalise funding streams, make savings and
take a more disciplined approach to Government spending.
2.36 Fire resource expenditure will reduce by 13 per cent in real terms over the Spending Review period. Within this, central government grants to local authorities will be reduced by 25 per cent over the period. To achieve this level of savings, the Fire and Rescue Service will need to modernise, increase efficiency and deliver workforce reform. It will be for individual fire authorities to decide how to make these savings.
Local Government
2.37 The Local Government settlement includes:
- significant devolution of financial control to councils, by removing ringfencing around all revenue grants except simplified schools grants and a new public health grant, the number of separate core grants simplified from over 90 to fewer than 10, and more than £4 billion of grants rolled into formula grant;
- funding in all four years of the Spending Review to enable local authorities to freeze their council tax in 2011-12;
- an additional £1 billion a year for Personal Social Services grant, which is rolled into local government formula grant as part of an overall £2 billion a year of additional funding to support social care by 2014-15;
- the first community budgets in 16 local areas, to pool departmental budgets for families with complex needs, from 2011-12;
- overall resource savings in Local Government DEL to councils of 28 per cent over the four years;
- the Spending Review settlement means that while on average, central government funding to councils decreases by around 26 per cent over the next four years, councils’ budgets decrease by around 14 per cent once the OBR’s projections for council tax are taken into account; and
- retaining the important flexibility of prudential borrowing, with a forecast that total capital expenditure by local authorities will fall by 30 per cent by 2014-15.
Supporting long term growth
2.38 Individual councils make their own capital investment decisions to support local priorities and drive growth. The Government is maintaining the important flexibility of prudential borrowing, to enable councils and their partners to invest in key local priorities. The Spending Review requires tough choices, and so that loans to local authorities better reflect the availability
of capital funding, interest rates on Public Works Loan Board (PWLB) loans have been increased to 1 per cent above UK government gilts. The amount of self-financed capital expenditure is forecast to fall by 17 per cent over the four years.
2.39 Capital funding from all departments to councils will fall by around 45 per cent over the Spending Review period. The Government will prioritise capital investment on areas of greatest economic value, such as high value local transport. Further detail on Tax Increment Financing and the future incentives and planning powers open to local authorities to support growth will be provided in a White Paper on local growth later this year.
Fairness
2.40 The June Budget announced the Government’s intention to work with local authorities to freeze council tax in 2011-12. The Spending Review now announces that local authorities who freeze their council tax next year will have the resultant loss to their tax base funded at a rate of 2.5 per cent in each year of the Spending Review period.
2.41 To enable local government to support social care, providing support for some of the most vulnerable people in society, the Government is providing £1 billion of additional funding through the NHS budget to support joint working between the NHS and councils. In addition, Personal Social Services grant for social care has been increased by £1 billion to £2.4 billion a year by 2014-15, rolled into formula grant.
2.42 The Government will reduce spending on Council Tax Benefit by 10 per cent and localise it from 2013-14 while protecting the most vulnerable. In addition, the Government will consider providing greater flexibilities to local authorities to manage pressures on council tax from the same date.
Reform
2.43 Local authorities will have to make significant savings over the Spending Review period, in line with other parts of the public sector. Many councils are already fundamentally reviewing their roles and services, including using greater personalisation and increasing delivery through the voluntary and community sector. In 2011-12, £200 million will be available to councils to accelerate reforms of local services.
2.44 To support these reforms, the Government will devolve significant financial control to councils. Ring fencing of all revenue grants will end from 2011-12, except simplified school grants and a new public health grant; the number of separate core grants will be radically reduced from over 90 to less than 10, including a single non ring-fenced Early Intervention Grant worth around £2 billion by 14-15; and more than £4 billion of revenue grants will be rolled into formula grant.
2.45 The first community budgets will be run in 16 local areas from April 2011 for families with complex needs. These will pool departmental budgets for local public service partnerships to work together more effectively, help improve outcomes, and reduce duplication and waste. All places may be able to operate these approaches from 2013-14. Councils and their partners will also have greater flexibility to work across boundaries in health, policing, worklessness and child poverty.
2.46 The Government is ending the previous top-down performance framework for councils. Local authorities and their partners will be able to cease reporting any of the 4,700 local area agreement targets, and those that are kept will not be monitored by Government. In implementing the new Transparency Framework, the Government will work with councils to reduce the amount of data local government is asked to collect by central government, and develop a single, comprehensive list, to be reviewed annually.
Home Office
2.60 The Home Office settlement includes: police resource funding reducing by 14 per cent in real terms by 2014-15, taking into account central government funding and the OBR’s council tax precept forecast. Savings will be made from efficiencies in IT, procurement and back office functions, as terms and conditions of service are reviewed, allowing the police to focus on addressing the crime and disorder concerns of local communities;
2.63 Police forces will become more accountable to the communities they serve, through the introduction of directly elected Police and Crime Commissioners. This will ensure that police forces focus their resources on tackling the crime and anti-social behaviour which matters most to local communities.
2.76 The CPS accounts for over 90 per cent of the LODs’ budget. The CPS will radically reduce its cost base while maintaining and strengthening its capability to protect the public by robust and effective prosecutions. The cost of headquarters will reduce significantly, with all its functions exceeding benchmarks for corporate service delivery. There will be more devolution and management lines will be streamlined so local prosecutors are empowered to respond to local concerns and consistently deliver core quality standards.
Department for Work and Pensions
reducing spending on Council Tax Benefits by 10 per cent and localising it, saving £490 million a year from 2013-14, while protecting the most vulnerable. In addition, the Government will provide greater flexibilities to local authorities to manage pressures on council tax from the same date;
Cabinet Office
2.148 The Office for Civil Society has been funded to provide support for growing the Big Society which will include encouraging volunteering, building the capacity of the voluntary and community sector, establishing community organisers and setting up a Community First Fund to support local and community organisations.
