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Incoming CIPFA Chief Executive Rob Whiteman's presentation from the LGC Summit 2013 (12-13 September 2013)

Incoming CIPFA Chief Executive Rob Whiteman's presentation from the LGC Summit 2013 (12-13 September 2013)

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The future of local government, Rob Whiteman, LGC Summit 2013 Presentation Transcript

  • 1. the future of local government Rob Whiteman Chief Executive, CIPFA
  • 2. 1 Macroeconomic and fiscal summary 2 Local government resources 3 Policy changes affect local government – but how?
  • 3. • Increase in confidence in the outlook for the UK economy • National Institute of Economic and Social Research - GDP growth 0.9% in 3 months to end of August 2013, up from 0.7% in 3 months to July. • OBR now predicting growth of 1.8% in 2014 • However we should exercise some caution – 2013 forecast cut from 1.2% to 0.6% in one forecasting period – Revision of depth of 2008/09 recession from 6.3% to 7.2% – UK economy will now only regain its pre-crisis peak in 2015 – Result is a much higher hill to climb to recover from the damage of the financial crisis 1 The macro picture – through a dark glass
  • 4.  We have all now operated in the context of large scale cuts and „austerity‟ for a few years now  Cuts to DEL and the impact of automatic stabilisers mean pre-crisis DEL/AME split of 60% DEL vs. 40% AME has now shifted to a 50/50 split.  Government has responded with AME cap from 2015  Certain parts of AME protected and some aspects beyond Government control ― Debt payments and public sector pension liability beyond control ― Some social security protected – eg: JSA & basic state pension  Further cuts to DEL needed before cap has an effect  So austerity will have to continue…. UK Government response – is first cut the deepest?
  • 5. Government debt – Are we alone and the economy overall? 0 50 100 150 200 250 % General government gross financial liabilities as a percentage of GDP Canada Japan United Kingdom United States Euro area (15 countries) OECD-Total Source : OECD
  • 6. UK Government Debt – It‟s a risky business 0 1 2 3 4 5 6 7 8 2012-13 2013-14 2014-15 2015-16 2016-17 £bn Projected increase in debt interest spending from a ppt increase in gilt rates (from 2012) Source : IFS
  • 7.  As part of continuing austerity programme the Chancellor has announced further spending cuts in 2015/16  Cumulative cut in DEL of around 10.3% over 5 years  Cuts in 2015/16 in line with SR 2010 departmental priorities  Protection for some (Health, Education and International Development) means deep cuts for others  CLG and FCO over 50% cut to DEL by 2015/16  Austerity likely to last well beyond 2015/16  Assuming no tax increases or cuts to AME would mean further cuts to DEL in 2016/17 & 2017/18  IFS estimate that in this scenario would mean another likely 7.9% cut from DEL Spending in 2015/16 and beyond – after the end of the beginning
  • 8. Source: IFS briefing June 28 2013
  • 9. Longer term financial sustainability remains a problem...
  • 10.  Specific measures announced at the SR will have large impact upon local government funding  Continuation of freeze grant puts additional pressure on councils to cut expenditure  Freeze over long period will see value of council tax eroded and vital stream of funding for local councils dwindle  Changes to social rents likely to become another pressure on local authority budgets  PAC Committee - ““To date, councils have, as a whole, managed to cope, but with reductions likely to continue for several years, the pressures on the sector are set to increase”  Spending reductions were falling hardest on councils with the highest deprivation, and that some might cease to be viable 2 Local Government – the devil in the detail
  • 11. CIPFA CFO Survey – 2013/14 Cuts
  • 12. CIPFA CFO Survey – Risks to Budget 63% of CFOs less confident about delivery of 2014/15 compared to savings to date
  • 13. 3 Austerity and Beyond - Questions  Crisis Averted?  Citizen and the State – Community Workers? – A drop in the Ocean?  Efficiency through collaboration – Sharing alike? – Two tiers?  Complex Localism – Guided localism from the centre? – Beggar thy neighbour? – Letting go? – Do we know what is spent locally? – Councils, PCCs, CCGs, academies – how will they measure policy interventions?
  • 14. www.cipfa.org http://www.cipfa.org/policy-and- guidance/consultations/austerity-and-beyond Rob.whiteman@cipfa.org