Challenges and implications of the Autumn Statement

Local government lawyers will start 2016 dealing with the practical impact of the announcements made in late November by the chancellor in his Autumn Statement. Here we consider some of the possible developments they should be expecting and action they could consider taking.

Changes to funding

The announcement that the local government revenue support grant will be phased out for local authorities in England by 2020 represents a radical change in the way that local government is financed. The ability to retain all business rates revenues and to set business rate levels provides some hope of raising significant revenues if local authorities are in a position to attract a lot of business occupants.

But those with fewer businesses may struggle under the new financial regime. Authorities may find themselves competing with one another to set the most attractive rates to bring businesses into their areas, but they need to take care to set rates at a realistic level to enable them to deliver the services required of them. The issue about raising rates is, on the face of it, highly contentious and will, in some places, certainly create significant challenges.

Local authorities will also be able to generate funding for service reform projects thanks to the new right to retain all fixed asset receipts other than receipts from right-to-buy. This may encourage those authorities that have not already done so to identify and dispose of surplus assets to generate funding, which could see some authorities increasing the amounts of property disposal.

Local government lawyers will need to ensure their authorities are familiar with and comply with all of the relevant duties and constraints affecting land disposal by a local authority. These include the need to secure the best consideration that can reasonably be obtained and the need to advertise the disposal of open space. Authorities will also have to ensure they consider the long-term implications of asset disposal and have a strategy in place, rather than simply rushing to dispose of assets to gain the immediate benefit of increased retention of receipts. If an authority has any land listed as an asset of community value, the timescale for disposal will be affected by the moratorium requirements of the Localism Act 2011.

The new power to set a social care precept enables local authorities to generate income for social care spending by raising council tax by up to 2 per cent above the level which would usually trigger a referendum. This flexibility may be helpful but doubts have been expressed by organisations involved in care that the income will be insufficient to meet social care needs, even with the announcement of additional funding via the Better Care Fund.

Local authorities may instead have to consider higher increases in council tax to support these and other services, with the result that they trigger a requirement for a referendum on council tax. Local government lawyers may need to advise on the Local Government Finance Act 1992, which addresses the need for a referendum if a local authority proposes to set a basic amount of council tax that is excessive when judged against principles set by the secretary of state.

Local authorities will already be looking at their budgets for 2016 to meet their duty under section 30 of the 1992 Act to set the amount of their council tax by 11 March for the following financial year. This will provide an indication of the actual impact of the announcements in the spending review in the year ahead.

Integration of services

The announcement by the government of further funding for the Better Care Fund was presented as part of its commitment to 'join up' health and social care. Each part of England is charged with developing a plan for integrated health and social care by 2017, but the government has said it will not impose how the NHS and local government deliver this. It recognises that the ways local areas integrate services will vary, and appears to be allowing some flexibility to reflect the needs and characteristics of different areas, while meeting the national requirement of the integration of services.

We can expect considerable activity from health bodies and local authorities to develop and implement plans for their areas. Local authority lawyers will play a key role in ensuring that the arrangements adopted reflect a reasonable approach towards integration, while also ensuring the authorities involved meet all applicable local government and health duties.

Enterprise zones

The announcement of 18 new enterprise zones in England from April 2016, and an extension to eight existing zones, provides an opportunity to build on the success of local enterprise partnerships in attracting funding to secure development and regeneration in their areas.

The availability of revenue from business rates is likely to take on increasing importance for local authorities when the system of local government funding changes. Those areas with enterprise zones may value the effect they could have in encouraging businesses to develop in their areas. Local authority lawyers will wish to consider the relationship with the local enterprise partnership in deciding what monies are released to which projects, and how rates and receipts are recycled and repaid as appropriate.

Home ownership

There were implications for the public sectornin housing, too. For example, there were announcements of a target of 400,000 affordable homes by 2020, an increase in the budget available to private developers, and the imposition of a
3 per cent stamp duty surcharge on buy-to-let properties. The announcement of the London
Help to Buy scheme - aimed at helping those who have been priced out of the housing market by providing interest free loans of up to 40 per cent

of the value with a buyer deposit of 5 per cent - should have a significant impact on facilitating home ownership in the capital, although ensuring a sufficient supply of homes to meet the demand this could generate will be critical.

The government's commitment to encouraging home ownership will make the duties to be imposed on local authorities when the Housing and Planning Bill published in October 2015 becomes law even more important.

There could also be a significant effect on green belt land as the government is consulting on amending national planning policy to allow neighbourhood plans to allocate appropriate small-scale sites in the green belt for starter homes. The Housing and Planning Bill proposes that local authorities in England have a duty to carry out relevant planning functions with a view to promoting the supply of starter homes in England, and the secretary of state will have the power
to specify particular requirements with which
local authorities must comply. Local authorities

will also have a duty to grant sufficient suitable development permissions to meet the demand for self-build and custom house building in their areas.

Lawyers advising local authorities on planning issues will need to be prepared to advise on compliance with the new duties and to assist councils in the event of challenges, for example by developers who feel they have not been given sufficient opportunity to develop housing and attribute this to lack of attention by a local authority to starter homes and self-building in its area.

Regional devolution

Some of the detail in the spending review about devolution of powers to the English city regions was known. But the announcement of powers for elected city-wide mayors to impose a business rates premium for local infrastructure projects - if they have the support of their local enterprise partnership - focused attention again on the role of the mayors who will be elected for regions with devolved powers.

There has already been widespread interest in and take up of devolution agreements in English regions. Additional powers such as these will increase this further. It will be interesting to see how well individual authorities within an area with increased powers work together under the new arrangements, and the impact this has on the operation of local government as a whole. Although it has been discussed at length on a 'strategic' basis, there remains the need to consider how the relationship with the local enterprise partnership will be structured and documented.

The spending review addressed the duty of the government to protect economic and national security, and referred to the tasks facing the government of rebuilding the economy and embarking on an ambitious plan to reform public services.

For local authorities, which have already had to cope with the impact of severe cuts over successive years and the need to deliver services with increasingly stretched resources, it may seem daunting to contemplate the challenges and implications of the spending review, but this will be key to them being able to identify ways of using all available means to secure as much funding as possible for their areas. SJ

Tiffany Cloynes is head of public services at Geldards, England