Spring Budget - Group Leader's Comment - 16 March 2018

The LGA continues to call for 100 per cent of the business rates to be retained and for rapid treatment of appeals.

This week the Spring Statement announced little change in the funding to councils. We remain set to reach a shortfall of over £5 billion by 2020. We are working on the Fair Funding Review, but it does not alter the fact that the overall pot is simply not big enough to provide the essential services.

It is clear that we are part of the solution. Investing in local government boosts economic growth and reduces demand for other services, including the NHS. Early intervention and children’s care remain vital to protect children and families today and in the future.

The LGA continues to call for 100 per cent of the business rates to be retained and for rapid treatment of appeals. We had 10 new pilot areas previously announced able to retain all of their business rates. The high number of business appeals remains a risk to the economy as it delays payments, sometimes into the next financial year. More than a million businesses have appealed. The next business rate revaluation is now expected to happen a year earlier than planned, in 2021.

Economic forecasts are notoriously unreliable and 2018 forecast rate of 1.5 per cent is much the same as the population increase, suggesting the economic output per head has not increased. If the Office for Budget Responsibility is correct, we’re set to see the first consecutive five-year period since the Second World War where annual growth fails to exceed 1.5 per cent. Philip Hammond has suggested he would use this tiny, anticipated increase (0.1 per cent) for more affordable homes, which are clearly not coming out of new developments at anything like the rate needed. He also said he would seek ways of controlling slow payments to small businesses. Your council, like mine, may have a performance measure of “percentage of bills paid on time and within 30 days”.

Eighty million pounds has been allocated to help small businesses engage apprentices, earmarked out of the pot previously announced. The apprenticeship levy is currently charged to employers with an annual payroll of £3 million or more, which includes councils. It seems the number of apprenticeships has not grown since the introduction of the Apprenticeship Levy, due to funding limitations and the need for the employers to contribute a 10 per cent co-investment for apprentices aged 19-24.

The reason given for cutting funding to councils was to assist the national debt. While the deficit is back to its pre-crisis level, debt as a share of national income is more than twice as large as in 2008. Investment in council services helps lift the economy and the amount of tax raised.

Many of our members are working to improve our local economies. All our councils will have examples where investment has made a significant improvement to the economy of our streets and villages. Please send us any case studies you think may be helpful in illustrating our case. You may also like to join the Environment, Economy, Housing and Transport think tank.

Further reading

LGA responds to Spring Statement 2018

Spring Statement 2018: Leading business groups welcome Chancellor’s commitment to investment and industry (Independent)

Lukewarm response from business to Spring Statement (FT, £)

Chancellor announces £80m to support small businesses with apprentices (FE Week)

Spring Statement and associated documents (Ernst & Young)