What the government's 2015 Autumn Statement and Spending Review mean for local authorities.

Chancellor George Osborne delivered his 2015 Autumn Statement and Spending Review to Parliament on 25 November 2015.

This briefing contains the initial announcements and reaction from key stakeholders to the government's plans, including those contained in the spending review, for the next four years.

Further detail about these plans can be found on the Treasury website.

Further briefings will be provided in due course as the detail of announcements becomes clear. This process is likely to continue until at least the final local government settlement in February 2016.

This briefing note was prepared by John Courouble, Research and Intelligence Manager at Oxfordshire County Council. For more information, please call 01865 896163 or email [email protected]

Key headlines for Local Government

* Local authorities responsible for adult social care will be given "an additional 2% flexibility on their current council tax referendum threshold" on their council tax precept, to fund the increased costs of adult social care associated with the National Living Wage.

* An additional £1.5bn of funding for local government from the Better Care Fund by 2019- 20, and ring-fencing of the public health grant will continue in 2016/7 and 2017/8.

* Confirmation that the national public sector pay award will average 1% for a further four years from 2016/7.

* Consultation on the New Homes Bonus "to sharpen the incentive and reduce the length of payments from 6 years to 4", to be set out in the local government settlement including a floor to ensure no local authority loses out disproportionately.

* Any income raised from the sale of council assets will be permitted to be used locally on the "revenue costs of reform projects", with local authorities encouraged to draw down financial reserves.

* £12bn for the Local Growth Fund (as previously promised), and continuing core funding for LEPs.

* Creation of 26 new or extended Enterprise Zones, including 15 zones for smaller towns and rural areas.

* A new apprenticeship levy set at 0.5 per cent of an employer's pay bill – but every employer will receive a £15,000 allowance to offset against the levy.

* £5bn for roads maintenance, and the creation of a permanent 'Pothole Fund'.

* £2 billion to protect 300,000 homes from flooding.

* Department for Work and Pensions will reduce the size of their estate and co-locate job centres within local authority buildings.

* New national schools funding formula to be phased in from 2017, with a per pupil protection for dedicated schools grant and pupil premium.

* Sixth Form Colleges to be 'encouraged' to convert to Academies to avoid having to pay VAT.

Other areas of note

* Economic Growth of 2.4% forecast for 2015. Government to borrow £8bn less than forecast, with the aim of securing £10.1bn budget surplus by 2020.

* Planned £4.4bn in tax credit cuts abandoned, with taper and threshold rates for working tax credits and child tax credits remaining the same. As a result, government to breach overall welfare cap in first years of Parliament.

* Free childcare from 2017 limited to those working more than 16 hours a week, and a £300m increase in funding for disadvantaged 2-year olds.

* Policing budget protected in real terms; Police and Crime Commissioners will be allowed "greater flexibility in raising local precepts in areas where they have been historically low".

* The NHS to receive an additional £10bn a year above inflation by 2020, with £6bn frontloaded next year.

* Capital funding of transport projects to rise by 50% by 2020 (Money for new rail projects includes the electrification of TransPennine, Midland Mainline and Great Western rail routes).

* The housing budget will be doubled to £2bn. Measures to increase housebuilding and home ownership include:
- Building 400,000 more 'affordable homes', half of which will be starter homes.
- Public land will be made available for 160,000 homes
- Restrictions on shared ownership to be removed and planning system reformed to deliver more homes
- New 3% surcharge on stamp duty for buy-to-let properties and second homes

* Local authorities taking on more responsibility in supporting homeless people – with the proposal for some of the administration of housing benefit to be devolved.

* Education: £300m for nurseries to help deliver the commitment to 30hours free childcare for three and four year olds (where the parents work over 16 hours per week), continued funding for free infant school meals, protection for the pupil premium, and 500 new Free Schools and University Technical Colleges.

Initial stakeholder reactions:

Local Government Association

Responding to the 2015 Spending Review, Lord Porter, Chairman of the Local Government Association, said: "Today's announcement on council tax will go some way to allowing a number of councils to raise the money needed to offset some of the cost of social care. The £1.5 billion increase in the Better Care Fund announced today is good news, but it's vital that this is new money and must be spent on adult social care.

"Today's Spending Review has handed down a difficult £4.1 billion funding cut over this Spending Review period for our residents and comes on top of almost £10 billion in further demand-led cost pressures facing councils by the end of the decade. The consequences for our local communities who will suffer as a result should not be underestimated.

"It is wrong that the services our local communities rely on will face deeper cuts than the rest of the public sector yet again and for local taxpayers to be left to pick up the bill for new government policies without any additional funding.

"Even if councils stopped filling in potholes, maintaining parks, closed all children's centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.

"These local services which people cherish will have to be drastically scaled back or lost altogether as councils are increasingly forced to do more with less and protect life and death services, such as caring for the elderly and protecting children, already buckling under growing demand.

* Allowing local government to retain 100 per cent of their business rates income will help councils try to mitigate some of the pressure they face following further funding cuts. While it is positive that the Treasury has worked with us to localise business rates, this is just the start of the journey. We will continue to work closely with Greg Clark and the DCLG team on the detailed work and consideration that must go into what extra responsibilities councils should take on to ensure we get the best outcome for local communities.

Local Government Information Unit

Jonathan Carr-West, Chief Executive of LGiU commented "This was not the slash and burn budget many feared. The Chancellor was keen to emphasise that public spending cuts would be at half the rate of the last Parliament and there were middle England give aways on museums, sport and policing levels. Nonetheless, we are still looking at significant year on year reductions in public spending.

"The Chancellor can use the Spending Review to try and change the size of the state, but only local government can help him change the shape of the state.

'It's no good building houses unless you are also building communities'. Housing needs to be linked to planning, social care, economic development and public service reform. Only local government can link these up in an effective and democratic way. That's why devolution matters.

Money for the local growth fund, the abolition of uniform business rates, the ability to spend the proceeds of asset sales and devolution deals on transport, planning and infrastructure are all good things and the Chancellor should be praised for them but they are only a first step. A ring fenced precept for social care is hardly localist.

"If we are to realise the Government's ambition for a country that spends less but to greater effect, we need fuller and faster devolution to give every part of the country complete control over public services and over public finances".

New Local Government Network

Simon Parker, Director of local government think tank NLGN responded: "George Osborne has set out a spending review for balancing the nation's books, but his plans for deep council cuts show he is in denial about the challenges Britain's demographics pose to hard-pressed social care departments.

"While giving councils the ability to make a 2% council tax increase is a lot better than nothing, it comes nowhere near to solving the problem. In poorer parts of the country such a raise could generate as little as £500,000, which is not enough to cover planned increases in the national living wage, let alone fill the service provision gap caused by cuts. This is a drop in the wrong ocean.

"With the number of over-85s projected to increase by nearly 20% by 2020, it makes no sense to ask already-squeezed local authorities to bear such a large share of deficit reduction. There is a danger that we are simply storing up spending pressures for the future.

"The chancellor's short-termism means cutting critical budgets that support local economic prosperity. Local government must play its part in finding innovative solutions that deliver more for less, but councils cannot be expected to outwit the aging process.

"George Osborne must set out a long term settlement for health and social care, not just cut and hope for the best."