Localis Responds to the 2023 Autumn Statement

Two pressing contextual factors have shaped both the Autumn statement and the manner in which it was delivered, which unhelpfully for the Chancellor are entirely at odds with each other.

The first is the Office for Budget Responsibility’s (OBR) forecasts of a steep decline in living standards, low growth and inflation persisting for longer than expected. The second is the fact that we are heading into an election year and the governing party continue to poll dismally. Perhaps at the start or interim of a Parliamentary cycle, the headroom gained from inflated tax receipts might have been spent on shoring up public services or long-term investment. As it is, however, political calculus has resulted in a large portion being spent on tax cuts – which are in any case unlikely to leave British citizens feeling flush with cash when they arrive in January after two years of soaring inflation.

Those two contextual factors have played out in a similar way for the local state. The impending election has led to focus on avoiding the most visible of the looming crises for councils, and only in the short term. The grim economic outlook combined with an outmoded approach to growth and public finance has forestalled any serious reckoning with the underlying conditions which, tragically, have so much to do with driving economic malaise in the first place. This was an Autumn statement comprised of crisis aversion and lacking the kind of vision for renewal which the Conservative party must surely put together if it is to make a serious offer to the electorate in 2024.

No alarms and no surprises  

The sector has been drawing attention (to put it politely) to a number of ‘cliff-edge’ situations over the past year, and these have been addressed or at least forestalled in the statement. The restoration of Local Housing Allowance to the 30th percentile will help to swerve what might have been a large number of councils falling into section 114 territory through the costs of temporary housing provision. For local businesses, particularly pubs, the extension of business rates support will provide a lifeline and prevent our nation’s high streets becoming a gap-toothed boulevard of shuttered bars and restaurants. With these measures, the government has provided a measure of peace of mind to many tenants and business owners and prevented some extremely visible symptoms of national decline proliferating in the run up to the general election.

Yet there is nowhere near enough on the actual arresting and reversing of this decline, and little hope from the tone of the announcements that this will be forthcoming in the spring.

The last thing anyone reading this newsletter needs is another reminder that the best solution to a housing crisis is the provision of housing, and few will be under the illusion that the retention of planning fees will alone lead to the kind of generational uptick in housebuilding that is required. Likewise, the business rates relief is welcome, but it cannot possibly be the most effective solution for the government to simply continue to foot the bill. The tax is broken, and it must be abolished and replaced by something fit for purpose in the third decade of the 21st century.

Finally, there is little in this statement to reassure those of us worried that climate change, the most serious existential threat currently facing humanity – with apologies to AI doomsayers, I will go with the threat that is causing islands to disappear as number one – is not being taken seriously or tackled comprehensively enough across government. It’s nice to see a row back from the culture war tone taken in the giddy aftermath of the Uxbridge by-election, but I think it would’ve been nicer still for the decarbonisation mission to be made a more central tenet of the government’s plans going forward.

Single budgets and devolution

The desired result of levelling up was a hotly contested issue in the years between the 2019 election and the publication of the white paper in 2022. One outcome that squarely no one could have desired from the agenda is local government in England becoming more complicated. Yet that is what has been delivered, with asymmetric devolution deepening through a patchwork of deals resulting in an uneven governance landscape even within regions. Recent develops will, for example, result in an East Midlands with four layers of government and a variegated system of powers covering the region – what’s known in planning and investment terms as a migraine.

This baked-in complexity and asymmetry is a problem waiting to happen. If the only serious route to proper powers is combined authorities, then at some point they will need to stop being the end of a long process of internal politicking and local wrangling and become the standard governing framework across the whole country. This is not a popular view among the entire local government family by any means, but it seems to be the only sensible way of having an entire country which is consistently governed at the local, subregional and regional level – a prerequisite for long-term planning in both spatial and economic terms.

Most troubling, however, is the revelation that the new level 4 devolution to be handed out to the poster children in Greater Manchester and West Midlands will include single funding settlements at the next spending review. This is fine in of itself, but it distracts from the more urgent call – made by ourselves most recently in Level Measures but a consistent ask from the sector for decades – for a single budget settlement for local councils. When we spoke to dozens of local authority chief executives from across the country for Level Measures, the response was unanimous: effective public service provision in our constrained context depends on long-term, singular budget settlements for councils. This cannot become the preserve of Tier 4 devolution authorities alone, and we can only hope that effective management of single development budgets at combined authority level will lead to some trust being fostered in the ability of the local state to manage its finances without an intricate series of ringfences.

Investment opportunities?

Placing investment zones in major conurbations is a good idea, with the common criticism that these zones simply displace rather than increase activity less applicable to urban centres than other areas. This type of policy is only one side of the equation however, and our attempts as a nation to make up the other seem increasingly limp-wristed as the momentum for levelling up continues to peter out. In an increasingly mercantile and statist world, the idea of a small government playing a minor role on its side of a clearly delineable state-market divide looks increasingly out of touch and insufficient.

In reality, the state will need to do much more to encourage investment than simply get out of the way. The country is currently in no condition to freeze government investment in cash terms. Businesses need more housing, transport infrastructure that is up to the European standards and vastly improved public services just as much as, if not more than, tax breaks. Measures to improve Britain’s performance in these areas remain entirely too piecemeal and slow-moving. Without, at minimum, a long-term plan for delivering housing on a generational scale around our major cities, placing investment zones within them will amount to small beer.

The mission or the vision thing?

One sense that I couldn’t shake throughout the statement was of a lack of mission, facilitated by an unwillingness to examine core assumptions that history has shown to be dubious at best. Vestiges of previous policy regimes sit in this budget as they do in the cabinet, but does it amass to a coherent vision for this stagnant and beleaguered economy? As with the austerity years, there is a focus on reducing the national debt. As with the levelling up years, there is a focus on improving regional productivity, to the aggregated benefit of the whole nation. As with every year, there is an emphasis on reducing taxes and making work pay.

What a rejuvenated national and regional economic would look like, how it would serve to benefit the millions of households in Britain who have been struggling now for years, remains largely unexamined. It is important for the public and for business that the government can pull disparate threads together into an overarching vision. This is something which, for all its flaws in implementation, the 2019 Conservative government was able to do with levelling up as a flagship domestic policy.

It is also important for local government to know the national policy context in which they are operating, and the sector responded vociferously to the challenge laid out by levelling up, despite all its many misgivings. Before the next general election, it must either be entirely re-energised or wholesale replaced.

Joe Fyans, Head of Research