Jeremy Hunt’s Autumn Statement set itself the task of closing a £55bn gap between the government’s fiscal targets and its actual revenues and spending. Expectation management operations were in overdrive, promising tough times ahead and warning that no department would be safe from the Chancellor’s axe. In reality, many of the toughest decisions have been put back two years – beyond the next general election, which many Conservatives expect to lose. Large chunks of essential funding for health, education and social care were protected, and capital projects also survived the chop.
Nevertheless, the Statement confirmed a dire economic outlook for the UK. Public spending will be squeezed as the economy endures a recession. Unlike the previous round of austerity under George Osborne, this fiscal tightening will be accompanied by a new period of higher interest rates that will do little to soften the blow. Living standards will contract by 7 per cent over the next two years. Average pay packets will still have less purchasing power than when the Tories took power in 2010.
For local authorities, already the biggest victims of departmental budget cuts for the last decade, renewed austerity will have dire consequences. Although councils have been given the breathing space of being allowed to raise council tax by 5 per cent, this will not be enough to cover the massive projected deficits that local leaders are warning of across the country. To gauge the reaction to the Autumn Statement in councils up and down the country, Spotlight asked local leaders from the Labour and Conservative parties for their verdicts.
Adam Hug (Labour), leader of Westminster City Council
The Chancellor said that everyone would be poorer following this Autumn Statement and he was absolutely right. He warned that there would be no rabbits magically produced from hats, and he was right on that too. Not only were there no bunnies but there was no hat, no wand and no vision beyond this reheated Cameron-era conjurer attempting to reuse the old trick of austerity disguised as prudence, all the while trying – but failing – to distract from the “fiscal black hole” his party’s chaotic mini-Budget left the country with earlier this autumn.
You can tell Jeremy Hunt has got George Osborne back in to advise him as we were treated to more sleight of hand economics and the devolution of political pain to local councils. For councils, and for our residents, the reality is that the coming 12 months will be grim. Local authority budgets are being slashed in real terms, and to try to plug the gap we are being given the “flexibility” to increase council tax and the social care precept by 5 per cent without a referendum. Council tax remains a regressive tax, unreformed for the last 30 years, and it’s one that puts the pain onto our poorest residents. Similarly, the suggested precept rises simply try to pass the buck for the government breaking its manifesto promise to “fix social care” during this parliament.
Hunt’s statement provided only sticking plasters for the cost-of-living crisis. It will leave the overstretched local government sector doing its best to pick up the pieces, doing what we can to help our residents through incredibly tough times. With the energy price cap set to rise, we are going to see an even wider group of people really struggle next year. That will include hard-working public servants, while NHS staff won’t get the pay they deserve as the government tries to balance the books on the backs of public sector workers.
There was no sign that the government has a plan for growth either, with tinkering around the edges on business rates rather than the root and branch reform that’s needed. Inexplicably, the government has turned down the chance to help our high streets and the public finances by blocking plans for an online sales tax. This is a government out of ideas and reaching the end of the road.
[See also: The Tories are trapped with no good options]
Rob Humby (Conservative), leader of Hampshire County Council.
Like households across the country, in Hampshire we are now looking closely at the detail in the Chancellor’s Autumn Statement, what it will mean for our own budgets in these areas, and the responsibilities we have to Hampshire’s 1.4 million residents. However, it won’t be until we see the provisional local government settlement at the end of this year that we will know the full extent of our overall funding for 2023-24.
For many years we have stressed the pressures being felt in the adult social care sector, so the extra support announced yesterday for vulnerable adults is to be welcomed. I am pleased that government recognises the importance of tackling the critical challenges faced in this area. Naturally, funding support announced for education and the NHS is also positive, plus the extension of the Household Support Fund – awarded to local authorities to help the most vulnerable households with the rising costs of living.
However, the fundamental, long-term budgetary pressures facing local government as a whole still remain. They are the result of years of national austerity, inflation and rising demand, and we continue to press the government for the sustainable funding solution we need if we are to continue to maintain essential services – social care, schools, roads and local economic development. Many of these act as the backbone of our communities.
While the government has also given greater flexibility to local authorities on raising council tax, it is by no means the remedy to the sector’s overall funding dilemma, particularly at a time when household budgets are already facing considerable strain. One possible solution is the greater freedoms and powers that come with devolution. I am encouraged by the government’s intention to roll out more devolution deals across the country. We will be continuing to work with our partners across our region to ensure that important progress is maintained in this area, having already submitted our prospectus to the government for a County Deal for the Pan-Hampshire area, earlier this autumn. In the meantime, we await word next month of our provisional settlement for the coming financial year, which will provide the crucial detail we need to prepare our budgets for serving the people of Hampshire in 2023-24.
Tim Oliver (Conservative), chairman of the County Councils Network
Before the Chancellor took to his feet for yesterday’s Autumn Statement, the overriding feeling was that of doom and gloom. The Office for Budget Responsibility’s economic forecasts made for tough reading and Jeremy Hunt pulled no punches on difficult decisions that he was required to make. The financial turbulence that is affecting households across the country has impacted on councils too – the County Councils Network has warned that its members face £3.5bn in additional costs this year and next.
But by 12.30pm many of us in local government would have felt that we were in a much better position than at the start of the day. The move to delay the forthcoming social care charging reforms is brave: it was a key pledge of the Boris Johnson government and we supported the principle. With rampant inflation and rising demand, however, councils faced a situation in which, by October next year, thousands more people would be eligible for state support for their care bills at a time when services are already creaking.
We are pleased that the government listened to our calls to delay these reforms, but they would have counted for nothing if funding earmarked for these changes was “banked” as a saving instead. Again, the Chancellor was in listening mode, and re-prioritised this money to be spent on addressing pressures in the system. The unexpected addition of further grant funding for social care was another welcome surprise, and will allow us to commission more care packages for the most vulnerable, drive down care waiting lists and reduce bed-blocking in hospitals.
However, councils will receive no extra funding for non-care services over the next two years, and continue to face tough budget decisions. Beyond 2025, because of proposed reductions in the growth of funding after 2025, there is the real risk that councils’ deficits grow to unsustainable levels. Important economic growth and climate initiatives, alongside bus and library services, will all be in the line of fire if this comes to pass. Overall, though, councils will feel that in the short-term they have some vital breathing space. The hard work on improving care services and delivering for residents begins now.
Roger Gough (Conservative), leader Kent County Council
There are advantages to having a Prime Minister who was once a local government minister; a Chancellor who is a former Health Secretary cognizant of the pressures in adult social care; and a heavyweight levelling up secretary aware of councils’ pressures and fragility. This has resulted in some significant gains for local government in the Autumn Statement. What it does not do is address the structural crisis that still threatens to envelop us.
In the run-up to the Statement, the Leader of Hampshire County Council, Rob Humby and I wrote to the trio of ministers about that crisis. At its root is the steady squeeze as needs and costs in adult social care and children’s social services outpace any growth in council resources. Add to this the aftershocks of the pandemic, and this year’s surge in inflation, which has a direct impact of £45m on my council’s budget, and a chronic pressure becomes critical.
The consequence of this is councils forced to retreat to a threadbare statutory core from the activities that are most valuable and visible to our communities, as well as capacity to support economic recovery. Worse still, even with these service cuts, the structural squeeze continues and delivering financial balance looks impossible beyond the shortest of horizons.
The most significant measures announced by the Chancellor concerned adult social care: £1bn extra funding for next year, 60 per cent delivered via the NHS and 40 per cent via the local government settlement. Secondly, the social care charging reforms will once more be delayed but councils will retain the funding that was provided to facilitate their introduction; a welcome recognition that existing plans took no account of demographic and other pressures. General support for local government will remain flat (so the sector absorbs inflationary pressure), but councils with social care responsibilities will see the effective cap (the referendum limit) on council tax rises go up to 5 per cent.
Chiefly because of the social care changes, this is a significantly better outcome for 2023-24 and 2024-25 than seemed likely before the Statement. But while it means that balancing the budget for the next year no longer looks quite so Herculean a task, it can still only be done through painful and severe service decisions. Councils will also have to weigh up securing extra revenue with increasing council tax at a time of squeezed household living standards, and offering our residents less for more. Lastly, however welcome the immediate relief, it is just that; the structural, not so longer-term problem remains unresolved. The wolf is still at the door, even if he is no longer in the kitchen.