How the Budget will affect Local Government

Budget announcement - LGA on the day briefing 23 March 2011

LGA Key Messages

• Local government has recently been handed one of the toughest settlements across the public sector. Formula grant (excluding police grant) is being cut by 12 per cent next year, but cost pressures in areas such as adult social care, children’s protection, waste management, and flood defence will continue to mount.
• As a result, we estimate that local government faces a funding gap in the order of £6.5 billion in 2011-12. This gap reflects the difference between what local authorities across England would need to spend to maintain frontline services in their current form and the income they will be able to raise from grants, fees and charges, business rates and council tax.
• No further reductions in public expenditure beyond those contained within the Spending Review were announced in the Budget.
• Repairing local roads – the LGA has been lobbying for additional funding for local authorities to repair damage to local roads caused by the recent winter's severe weather. We are very pleased that our work has been reflected in today's Budget announcement which confirmed an additional £100m for councils to deal with road repairs. The additional money is on top of the £100m announced in February, meaning councils will have an extra £200m for road maintenance.
• Enterprise Zones – the creation of 21 Local Enterprise Zones should help promote private sector growth by stimulating businesses to locate inside them. We are pleased that government has decided that Local Enterprise Partnerships should determine their location. This will require local knowledge and careful consideration – not least because of the impact of an enterprise zone on adjacent areas, where there is a risk of displacement. The ability to retain business rate growth inside the zones over a 25 year period is a welcome source of funds to local councils in the local enterprise partnership area.
• Small Business Rate Relief – councils welcome the extension of the temporary increase in Small Business Rate Relief, announced in 2010, until October 2012.
• Planning reform - councils have no wish to block growth and development and welcome the Government’s emphasis on existing commitments to reduce national prescription and bureaucracy, including drastic reduction in the 2,500 pages or more of national planning policy.

A full briefing document from the Local Government Association can be found here.