Watch out for the warning over welfare costs.

Ironically towards the end of the Chancellor's Budget speech news flagged up on the TV that Game, the high street computer games shop chain, was seeking administration with the loss of thousands of jobs. It was a salutory reminder that despite Osborne' s well-crafted and highly political Budget speech, that in the real world the econony remains on a knife-edge, especially out in the regions. With the eurozone growth rate downgraded to just 0.3% this year and the UK's still anaemic projection of 0.8%, the chances of the forecasts going awry are still considerable.
So what does it mean for local government? The Office of Budget Responsibility expects growth to be 2% next year and 2.7% in 2014. The Chancellor says borrowing will be £1 billion less than his forecast last November at £126 billion for 2011/12. - not including the impact of the state taking on the Royal Mail pension fund whose liabilities will be £200 million a year after the initial upfront credit impact of the fund. Public sector net borrowing will fall from its peak of 11.1% of GDP in 2009/10 to 4.3% in 2014/15. Borrowing in 2010/11 was £137 billion, £9 billion lower than forecast in the 2011 Budget. The elimination of the structural deficit by 2016/17 remains on course. The Budget claims that 40% of the cuts announced in the 2010 Spending Review will be achieved by April 2012 and that government departments will actually underspend by £6 billion in 2011/12 - a figure that definitely needs more scrutiny. As usual with Budgets beware of smoke and mirrors.
The growth agenda remains a key plank in government policy with an extra £270m for the Growing Place Fund, a new Pension Infrastructure Platform owned by pension funds which will deliver its first £2 billion of investment next year, £150m announced in TIF money for cities and the pilot 'earn back' fund for Manchester city region with the rest of the core cities being examined this year. Regional pay variations may be introduced to some Whitehall departments but not local government. The increase in the tax allowance to £9,205 from 2013 will be good news for low-paid council staff. Doubtless chief executives on salaries above £150,000 will be quietly celebrating the drop in the top tax rate to 45% from then - but will Eric Pickles insist they hand it back to their councils?
What however is especially interesting in the Budget is the commentary about welfare reform. Osborne expects the new Welfare Reform Act to deliver savings of £4.5 billion by 2014/15 but his speech warned that if welfare continued to rise - it is already a third of all government spending - there could be as much as £10 billion that would need to be cut from it. Watch this space.
Overall, the underlying economy remains fragile but the Budget is politically canny, obscuring the reality of the real world with modest tax cuts and tax tweaking with populist measures like the tax on company-owned properties. For local government and the public sector I'm afraid it is business as usual.