Long-term financial settlement must be foundation for national missions
Originally published in the Local Government Chronicle – 25th July 2024
We’re still in the month of July and while school doesn’t feel quite out, it’s fair to say that since the election, it still feels like one of those times when more happens in weeks than decades.
The first days and weeks of Sir Keir Starmer’s government have looked assured and purposeful, a perception cemented by the heavy legislative agenda outlined in last week’s King’s Speech with its focus on building, devolution and growth.
There is a sense of ‘happy days are here again’ framed in the iconic shot of the metro mayor selfie taken outside Number 10 and bolstered by local government secretary Angela Rayner’s emollient talk at Smith Square on improving and reforming central/local relations.
This is all good vibes only mood music of the most auspicious kind before parliament heads for recess and the summer holiday kicks in – but might there be an outbreak of the summertime blues before the end of August?
Certainly, at the time of writing we haven’t heard too much about the new government’s plans to restore stability to local public finances.
This isn’t too surprising given the chancellor’s declared need to look under the bonnet of the public finance engine (and presumably mutter about the cowboy nature of the previous mechanics). This exercise will lay the groundwork for the forthcoming Comprehensive Spending Review that will finally have to assert and rescue real public spending choices from the cliff-edge fantasy land they were left on the eve of election.
It is a known known that the parlous state of council finances is parked on the desk of Number 10 chief of staff Sue Gray. And only this week the Institute for Government’s paper on fixing public services again laid clear the unsustainable upwards trajectory of exceptional financial support since the turn of the decade, in allowing councils to borrow against capital resources to plug serious impasses in meeting day-to-day revenue shortfalls.
It is highly likely that the goodwill can continue into the autumn ahead of the desired delivery of the promise of long-term funding settlements – but some questions will remain.
Property and trade specialists loudly lamented last week the lack of mention of business rates reform in last week’s King’s Speech. For them, business rates as the dog that didn’t bark in the night suggested its abolition – and with it the hope of high street renewal as much as fiscal fairness – isn’t a priority for the new government. This leaves any wiggle room from council tax funding – minus any movement on bands which was a manifesto commitment – and other domestic property charges as potential fiscal pivots.