Today the Chancellor of the Exchequer set out his spending plans for the next four years in the Spending Review. Key announcements included:
- Central government funding of local government will fall from £11 billion in 2015/16 to £5.4 billion in 2019/20. To compensate, locally raised funding (primarily through Council Tax and Business Rates) is expected to increase by £6.3 billion over the same timeframe – based on estimates by the Office of Budget Responsibility.
- Councils with social care responsibilities will be able to add an additional 2% to Council Tax to fund adult social care in their areas. This, combined with additional funding through an “improved” Better Care Fund, will mean a real terms rise in funding for social care over the course of the Parliament.
- The Government will consult on how redistribution arrangements might work under 100% business rate retention in due course.
- No new devolution deals were announced, however the Government did indicate additional deals with “other major city regions” will be announced shortly.
- The Spending Review announced an “ambitious plan so that by 2020 health and social care are integrated across the country”. Every part of the country will be required to have a plan for integration in place by 2017 and be able to implement that plan by 2020. Areas will shift from being managed under Better Care Fund arrangements and on to locally designed arrangements (e.g. Accountable Care Organisations, devolution deals, lead commissioners) once they have met the Government’s criteria for devolution.
- Local authorities will be permitted to keep 100% of capital receipts from the sale of assets and use these as revenue funding for transformation projects. The scope (and permitted timescale) of the term ‘transformation project’ will be defined through consultation by the end of December.
BDO will delve deeper into what this means for local authorities over the next few days once the dust has settled from this Spending Review.