DCLG four-year efficiency plans: what now post-Brexit?

28-06-2016

By Cliff Dalton, Head of Local Government Faculty, CIPFA

Has there ever been a more uncertain time for UK public services? Already six years into an austerity period and with a further 40% (£7.8bn) cut in RSG looming large for the remainder of the current spending review, and the public decides to pull out of Europe and move in a direction that we haven’t seen for over 40 years.

The full impact of such a decision is very difficult to fathom and varies widely between politicians, depending on which side of the argument they were supporting. Early indications though are of significantly spooked markets, a 10%+ drop in the value of sterling and levels of disquiet from those parts of the UK (Scotland and Ireland) who remain wedded to Europe and will now be looking closely at their own place within the Union.

CIPFA’s own thought piece of possible outcomes of the EU vote Treuble and strife must now be essential reading for all. It is a more sobering reminder from the Institute of how intertwined the UK has become over the last 40 years with Europe and tries to scope some of the outcomes (pros and cons) of our existing place in Europe and the likely impact on our economy; the workforce; welfare and much more from the changes now voted for.

Looking ahead, the timing and terms of the UK’s Brexit discussions with the rest of Europe must now take centre stage, as will any decision on who is best placed to steer the country through this period of adjustment, particularly now that Cameron has chosen to move aside. Already, the Chancellor has warned of an emergency budget due to fears of an economic downturn, but this has been met with strong resistance by MPs and is unlikely to be supported through the Commons.

In so many ways, the issues and full impact of our decision to leave the EU may come as much down to the personalities of those charged with steering a path, as it is likely to be around hard facts and financial modelling.

And what now for public services and local government in particular. It suddenly seems incredible that the Secretary of State spoke at the turn of this year about introducing four-year certainty of funding for local government. This was the government’s commitment to authorities to help ease uncertainty around its future resource levels and its attempt to encourage real innovation in how councils might deliver their services under its localism and devolution agenda. 

CIPFA ran a round table event in early June to look closer at the merits of a fixed settlement. Practitioners were certainly keen to support the initiative and hit the deadline for these plans of the 14 October deadline; but their enthusiasm was conditional upon the government not suddenly changing its mind and hitting them with further cuts in grant levels midway through the spending review.

This may ultimately prove to be a commitment that DCLG may not now have much of a say over as the full impact of the EU vote plays out and the Treasury starts to crunch the numbers once again around growth projections, inflation rates, interest rates and much more, and the affect that all of this will now over its spending plans and quest for a balanced budget.

CIPFA’s message to the sector remains the same. Efficiency plans should never have been a prompt to improve financial planning or service delivery arrangements; this should be at the heart of any well-run council and the Institute remains ready and fully committed to help any organisation, any Section 151 officer, who now feels worried about the turbulence ahead.

Perhaps the true irony of the government’s call to the sector to be clear on their efficiency plans may prove to be less about securing funding certainty and more about managing through a period of the exact opposite?