Localis responds to Spending Review 2025
Localis chief executive, Jonathan Werran, said: “Local government and the local state will take some initial heart from the central thrust of the spending review, especially the promised land of multi-year settlements, improved needs assessments and simplified funding landscape to return local government to a sustainable financial position. This will provide the sector with greater certainty in long-term financial planning it has been yearning for.
“Looking at the settlement itself, attention must focus on the implications of day-to-day revenue expenditure on frontline services, the promise of a £113bn uplift in capital expenditure for regional infrastructure projects and how changes to welfare provision through annual managed expenditure (AME) totals will impact localities.
“The review promises an increase in funding available for adult social care of over £4 billion in 2028-29 compared to this year, but until we have some fix on long-term funding of social care upon completion of Dame Louise Casey’s review, we will have to reserve judgment on the sustainability of local public services.
“Certainty is a virtue but does not in itself plug the funding gap local government finance directors must hope to close nor the expectation gap of residents paying more each year in council tax for fewer visible benefits. Indirectly, revenue limitations on other departmental areas such criminal justice and police, flood defences and transport, will also have a direct knock-on impact on place across the spending review period.
“Angela Rayner has secured a big win for affordable and social housing with a £39bn funding boost over the next decade. The quantum is not big enough on its own to make the sort of generational shift in housing provision we saw in the immediate post war era, but in the circumstances, and with an extra £10bn for financial investments through Homes England to crowd in private investment, it is a highly creditable bit of spending review negotiating by MHCLG.
“Beyond this, and as Localis’s recent report ‘New Stable’ suggested, there is a similar amount available from surpluses in the Local Government Pension Scheme, some of which could be safely directed to invest in critical local and regional infrastructure, which should by rights also include affordable housing.
“In respect of the new changes to the Treasury ‘Green Book’ and place-based investment cases, again we will have to pay attention to how many billions of projected capital expenditure escape from the pages and into the wild to help pump up and provide long-neglected regional infrastructure, energy and housing schemes.
The revised ‘Green Book’ will favour investment in particular parts of the country rather than where it is easiest to secure return on investment, and is potentially bad news for place leaders in London and the greater South East.
“A further pressing question, regardless of geography, is how government will work to uplift the severely depleted local authority capacity in areas such as planning and economic development, a gap which no amount of efficiency improvements is likely to plug.
“Investing for sustainable and inclusive growth requires places to be empowered not just with statutory instruments and capital injections, but also day-to-day spend to help combat the recruitment and retention problems currently facing local government as an employer.”