Analysis: A jolly Chancellor's Budget, but still tough times for councils

By Andrew Jepp, managing director, Zurich Municipal

ON WEDNESDAY, the Chancellor of the Exchequer, Phillip Hammond MP, delivered his first - and final - Spring Budget before the House of Commons following his announcement in November that the fiscal statement is to be condensed into one Autumn Budget, and a Spring Statement will be introduced from 2018.

Despite speculation as to what the Chancellor was expected to deliver - and whether any rabbits would be pulled out the hat - the Government had already made its intentions relatively clear prior to Chancellor getting to his feet.

So rather unsurprisingly, he delivered a statement that reaffirmed the Government's commitment to economic stability, with a number of announcements that will be of interest to local authorities, many of whom were hoping for a gesture of goodwill after some hard times.

First, there were some promises of additional funding. The Chancellor promised an additional £2bn of grant funding over the next three years to help local authorities deliver their social care obligations. The £1bn made available over the next year will be particularly welcome for councils facing difficulties now, and will serve to help local authorities deliver better care to those who need it most. Crucially, the funding may encourage a strategic, rather than risky, approach to delivering care.

Andrew Jepp, director of public sector at Zurich Municipal.

Council chiefs will also undoubtedly be reassured to see the Government provide local authorities with a £300m fund to deliver discretionary relief for businesses hit hardest by the rise in business rates. While more funding will certainly be welcomed, the long-term challenges councils face call for a carefully considered approach that prioritises collaboration and reducing risks in a wildly different landscape, not just more cash.

Furthermore, the Chancellor delivered against local authorities' calls for further devolution. London is set to see further powers devolved to it, including joint action to tackle congestion and a taskforce exploring a new approach to funding infrastructure.

This was announced alongside additional funding for devolved governments: £350m for the Scottish Government, £200m for the Welsh Government and £120m for the Northern Ireland Executive.

Despite the Chancellor's announcements benefitting both the devolved nations and the capital, many councils were expecting to see more concrete commitments to extend the Government's devolution agenda.

The Chancellor's promises of funding and further devolution come at a time when local authorities are looking for ways to make their money work harder and work with their peers to find efficiencies and savings. Many have proved resilient, despite the climate of austerity, embracing new and innovative methods to reduce excessive costs, while maintaining services at levels that the public expect.

Despite the resilience and innovation of local authorities, the Chancellor also announced yet more cuts to the public budget - and this will place additional burdens on local authorities. This follows the Government's recent decision to revise down the Ogden rate, which will place even more pressure on already stretched local authority budgets, forcing councils to take on new risks and find new ways to make ends meet. While many assume that such risk-taking is inevitable in the uncertain post-Brexit environment, it's essential that local authorities are prepared for the difficulties that this poses, and have robust plans in place to minimise and mitigate the risks and threats that will materialise in the years ahead.

Overall, the Budget was one of continuation rather than dramatic change, delivered by a seemingly jolly Chancellor, and this will come as a relief to local authority leaders. However, it is important to not forget that councils and local authorities are dependent on growth to continue to deliver essential services.

With the forthcoming Brexit negotiations set to fuel uncertainty, council leaders will be under no illusion that there are many more tough months and years ahead. Councils chiefs will take risks, and rightly so, for public demands are hardly waning. But responsible risk-takers should make sure they have robust plans in place, for that's the best - if not only - way to make the most out of this Budget at a time of uncertainty and against a backdrop of hard times.