Chancellor George Osborne’s Spending Review introduced a 2% precept on council tax for social care, an increase in house building and further cash for infrastructure.
Announcing the Spending Review in the House of Commons, he said: ‘By the end of this parliament, local government will spend the same in cash terms as it does today.’
However, his claims have already been dismissed by the chief executive of Chartered Institute of Public Finance and Accountancy, Rob Whiteman, who tweeted: ‘The claim councils will spend as much as now by parliament end will include some deft and dodgy arithmetic on devolution.’
Local government could face cuts of up to 56.3% to central grants in real terms by 2019/20, although the DCLG claimed the headline cuts were just 6.7% when additional revenue such as business rates, council tax and other cash pots were factored in.
According to the LGA, which calculated its figures based on central grant and business rates share, local government faced cuts of 24% or £4.1bn in cash terms.
Mr Osborne used his speech to dismiss the claim that ‘Britain had to choose between sound public finances and great public services’.
‘It’s a false choice; if you are bold with your reforms you can have both,' he said.
‘That’s why, while we’ve been reducing government spending, crime has fallen, a million more children are being educated in good and outstanding schools, and public satisfaction with our local government services has risen.
‘That is the exact opposite of what our critics predicted.’
Launching a Spending Review which put local authorities centre stage, Mr Osborne described his four priorities as:
- integrated health and social care
- a devolution revolution with infrastructure investment
- tackling social failures, and
- protecting national security
As part of his efforts to address the housing crisis, Mr Osborne doubled cash for housing and pledged to fund an extension of Right to Buy with a tax on second homes and buy to let properties. He also announced extra proposals to tackle the acute problems in London.
Plans for a 2% precept on council tax for social care, which had been widely leaked before the announcement, were accompanied by a further £1.5bn by 2019-20 for the Better Care Fund.
Other measures included:
- a u-turn on controversial plans to cut tax credits
- a ‘big package’ of new powers for devolution
- the confirmation of proposals on business rates
- allowing local government to keep 100% of the receipts on asset sales
- an apprenticeship levy to boost skills – and co-locating job centres in local authority buildings
- the removal of local authority involvement in schools
- increased investment in infrastructure
