Budget 2013 – the impact on local government
Author: The MJ |
Local government looks likely to receive some measure of protection from additional Whitehall spending cuts to be announced by chancellor George Osborne later today.
According to newspaper reports on the eve of the Budget, the DCLG, Home Office and the Ministry of Defence will be spared some of the fiscal pain following Cabinet representations from their respective secretaries of state – Eric Pickles, Theresa May and Philip Hammond.
The spending cutbacks, representing an additional 1% reduction for unprotected departments, are planned to enable the chancellor to divert 2.5bn from day to day resource budgets to capital spending on projects such as housing.
Existing government underspends, which last year amounted to around 7.5bn, will fund the reallocation of resources, informed sources believe.
A further squeeze on public sector pay is also expected in what experts predict will be a ‘bleak’ Budget with few surprises, against a backdrop of a further reduction in growth predictions and increased public borrowing forecasts.
Mr Osborne is expected to announce and end to ‘pay progression’ which previously guaranteed automatic pay rises for civil servants, police officers and teachers for time served rather than performance.
Independent economic forecasters the Office for Budget Responsibility are set to halve growth predictions from 1.2% to 0.6%. Separately, independent economics think tank the Institute for Fiscal Studies has estimated borrowing will be 7bn higher this financial year than the OBR calculated at the time of the Autumn Statement last December.
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