The Budget

In the end, having been softened up with a bombardment of carefully-spun scare stories, most council managers and members will have found this week’s Budget not a million miles adrift from what they expected.
A public sector pay freeze to save £3.3bn by 2014/15 was always on the cards, although the cut-off figure of £21,000 was more generous than the much-trailed £18,000. A review of public sector pensions was also expected, although once again, some commentators predicted that the final salary aspect might be stopped forthwith. Efforts to address the disproportionate impact of public sector jobs in certain regions will be modestly addressed by a regional growth fund for capital projects. A proposal to freeze council tax, while hardly squaring with the localist agenda of leaving councils to decide their priorities, has also been predicted, although whether it is wise is another matter.
Even the stiff headline figure of a 25% cut across non-protected departments over the next four years is not hugely at variance with what finance directors have already been factoring in from next year. It represents an extra 5% of real cuts ‘implied’ by the March Budget.
One chief executive said to me last week: ‘What really matters is just knowing what we have to deal with, so we can plan.’
But the real challenge comes in the autumn when the Spending Review is announced, supposedly on 20 October, and councils then get an idea of their own individual budgets. The question is: How will they react? Will they protect frontline services and cull back offices and share overheads? Or will they cut out all discretionary services and fall back on their core businesses? The challenge will not only be for them but for the coalition government. For if services bear the brunt, you can be sure the blame will be shifted upwards to ministers.
There is also a real prospect that the services councils jettison will be those earmarked for a greater role in Cameron’s ‘Big society’ idea. Already many of the area grants that were axed for this year were for community projects.
One voluntary sector chief recently told me councils were beginning to squeeze the contracts his society held with him. Ministers’claims that localism means devolving down to communities will ring hollow if they have no money to run anything.
The easy target for saving money will be for the ‘soft’ projects, those aimed at the poor, disabled, unemployed, and problem families, leaving budgets for ‘core’ services such as potholes, refuse, adult care, schools or children’s services as protected as possible.
The public must also be involved, not as passive recipients of services but as active participants in deciding priorities and understanding the true costs councils face, from electricity bills to cleaning up after litter-louts or pursuing anti-social neighbours.
Dealing with the next spending round will most likely be a mix of all these responses, salami-slicing costs, cutting back offices, getting the public to demand less and help more, sharing overheads, rethinking roles, culling middle management.
But we are not there yet. This week’s Budget is only the start of a long journey into a radically-different landscape