Autumn Statement 2016: A case of one step forward, two steps back?

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It is difficult for me to come to a clear decision on the Chancellor’s Autumn Statement. In many ways it represented a good day for housing, infrastructure and devolution. However, the devil is always in the detail. The Chancellor’s new fiscal rules amount to the reinforcement of austerity and ploughing ahead with the cuts which are pushing councils to breaking point. There was a huge omission of education funding and the roads budget is a mere drop in the ocean.

Let's first focus on the positives:

The government’s eye-catching investment in affordable housing, a £1.4 billion fund for 40,000 homes, is a refreshing change of approach. The Chancellor’s predecessor had focussed primarily on the plight of the first-time buyer, however, this policy places some power firmly in the hands of housing associations and local authorities, which we wholeheartedly agree with. These institutions need to have the flexibility to determine what type of tenure is being built in their community and meet local needs. We are hopeful that the impending Housing White Paper will continue in this vein.

Alongside the Autumn Statement, the Treasury also published A Northern Powerhouse Strategy for the first time. This sets out the Government’s commitment to devolution and delivering regional growth in the North, an issue we champion not just because it’s our backyard, but because the success of the entire UK economy depends on this rebalance of opportunities and funding. The Northern Powerhouse is now much more than just a slogan, with an emerging network of interrelated city regions and an active Transport for the North (TfN) driving integration of the north’s transport network and a strategy for unlocking interconnectivity and with it, productivity.

The government has also finally given Scotland its fair share of city deal funding with new commitments to Stirling, Edinburgh, Aberdeen and Inverness, but the Treasury must not delay any further investment in these Scottish cities. More powers for London and Greater Manchester are also a step in the right direction, but Merseyside, Leeds, Sheffield, and Tyneside must not be left behind.

The Chancellor made infrastructure investment a cornerstone of his Autumn Statement and he is absolutely right to prioritise the road projects that will have the biggest impact on congestion and housebuilding. LEPs in the North will receive £556 million for investment in projects – the lion’s share of regional investment in England which is yet another boost for the area. However we also need to ensure we are progressing the big ticket projects that will really unlock the potential of the region in the long term, especially the Trans-Pennine Tunnel and HS3 rail link between Manchester and Leeds.

Therein lies the problem

As soon as the £1.1 billion roads and public transport announcement was made, the Local Government Association’s (LGA’s) transport spokesperson, Martin Tett, advised that the current backlog of repairs on existing roads is £12 billion and currently it will take 14 years to fix the backlog of potholes.

The Chancellor did announce a funding for grammar schools of £50 million, however, they make up just 163 schools out of over 3,000 English secondary schools. When compared against the planned cuts of £600 million to the Education Services Grant, it is clear to see why the Association of School and College Leaders are “disappointed” in the Chancellor's statement and the LGA has warned that education institutions will be ‘at risk’ from councils unable to perform their duties.

The pressure on the authorities is clearly defined in our School Places report which highlights the scale of the challenge; 2,000 extra schools must be built by 2020 to cope with the projected increase in pupil numbers. Action needs to be taken now to avoid gambling with our children’s future.

The austerity targets set out by the previous Government are behind this lack of funding and cuts to services. When the Chancellor announced his second fiscal target – public sector net debt as a share of GDP must be falling by the end of this parliament – he has essentially indicated that he will stand by this programme.

Mr Hammond has earmarked £1 billion of planned savings to be reinvested into the public sector, however, councils have seen a minimum of a 60 per cent reduction in funding since 2010, amounting to £11.3 billion. To continue to expect councils to find savings while delivering services is a deeply concerning prospect and there are already warnings that councils in many areas will not have enough money to meet all their statutory responsibilities.

Just a few short months ago in July, Prime Minister Theresa May said, ‘We don’t just believe in markets, but in communities. We don’t just believe in individualism but in society. We don’t hate the state, we value the role that only the state can play.’

To ensure these words aren’t just empty rhetoric, central government needs to provide the funding the state needs in order to deliver those community services which sustain a thriving and vibrant society.

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Written by:

Mark Robinson

Group Chief Executive