Budget 2023: Regional perspective

Neil Barnett, Y-PERN Senior Policy Fellow based at Leeds Beckett University

Some quick thoughts on the Budget. It seems the Chancellor will have some leeway, but the demands and hopes for funding are, following years of Austerity, and the impact of inflation on budgets, limitless. With respect to broader policy issues, changes to child care have been trailed in the press, and an increase in the cap on what can be claimed back for childcare for those on Universal Credit would be a start. With respect to the cost of living/ energy crisis, continuation of the price cap subsidy is essential, but more targeted support would be better- via the introduction of a Social Tariff. Leaving aside the ‘macro’ issues- eg- taxation, borrowing- and focussing more specifically on issues affecting Regional and local governance…..

With respect to Combined Authorities, Tracey Brabin in a letter of 31st January to the Chancellor set out a series of measured ‘asks’ on behalf of the West Yorkshire Combined Authority, which largely apply to South Yorkshire as well. Leaving aside specifics, key issues to address, are the lack of long-term funding and certainty, especially for transport and ‘net zero’ investment, the need to move to direct, ‘single pot’ funding directly from the Treasury, and the need to move form short-term, single-pot funding and competitive bidding.

For local government:

The Autumn Statement offered some respite and an overall 9% uplift, and the financial settlement some certainty over two years….but assumed the maximum rise in council taxes, and left councils still to meet the challenges of double digit inflation and wage demands. Looking at the overall picture, ideally the Budget would deal with long-term structural issues in local government finance (although, given the number of times these have been kicked into the long grass, this is of course not going to happen….). A two year settlement remains inadequate and more certainty is needed via longer multi-year settlements, especially given the levels of investment and planning needed for rising demands in social care, and seriously investing in ‘net zero’, decarbonisation etc. Moreover, the ‘Fair Funding’ review, promised in 2016, has been abandoned, along with Business Rates reform. The distribution of council funding remains unfair and threatens the ‘levelling up’  agenda  and the Chancellor would ideally announce a review of the formulae and allocation mechanisms which take adequate account of needs and resource base.

The Local Government Association have set out a series of ‘asks’  which underline the financial pressures particularly on both adult and children’s social care the need to re-address long -term funding. In the short term, it is essential to account for the impact of inflation. Again any ‘respite’ additional funding has been short -term and inadequate to meet demand. In other areas, one change could relatively easily bee implemented to boost council/ social house building- allowing councils to retain 100% of council house receipts for building, and to set discount rates locally.. Again with respect to certainty and ending fragmentation of funding, there should be single, place-based funding for local net zero actions and skills.

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