Spending Review cuts hit local government

Spending Review

The Department for Environment, Food and Rural Affairs (Defra), and the Department for Local Government are amongst the worst hit government branches in the 2015/16 Spending Review. 

Announced by the Chancellor of the Exchequer, George Osborne, earlier today (26 June), the ‘Spending Round’ for the year 2015/16 sets out how government will spend taxpayers’ money during that year. Though the coalition did not have to release this review until next year, it is widely believed that releasing it early was a move to force Labour to show their hand in terms of what they will be presenting to the public before the general election in May 2015. 

Speaking in the House of Commons, Osborne said: “While recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care – and from rescue to recovery. Today, we announce the latest action to secure the recovery. 

“We have applied three principles to the Spending Round I set out today: Reform: to get more from every pound we spend; Growth: to give Britain the education, enterprise and economic infrastructure it needs to win the global race; and Fairness: making sure we are all in it together by ensuring those with the broadest shoulders bear the largest burden and making sure that the unfairness of the something for nothing culture in our welfare system is changed.”

According to the Spending Review, Total Managed Expenditure for the year 2015/16 will be £745 billion, and as such, the government will need to find £11.6 billion of savings to achieve ‘expenditure control’. 

Key points

Though there has not yet been detail on how the government will achieve the cuts, Osborne announced that public-sector pay rises will be limited to an average of up to one per cent for 2015/16, and that public-sector pay progression (which automatically upgrades pay annually) will end for those in the civil service, schools, hospitals, prisons and the police, but not the armed forces. 

Further, there are going to be expected job losses in government of 144,000 by 2015/16. 

Looking to spending, the Chancellor announced that the government will put £50 billion more investment into new infrastructure projects; £3.8 billion into a pooled budget for health and social care to deliver better services to older and disabled people; £200 million to extend the Troubled Families programme. Government will also launch an action plan to make the criminal justice system work together more effectively.

In regards to energy, Osborne announced plans for guarantees for new nuclear plants and tax incentives for controverisal shale gas drilling. Indeed, the Chancellor said that he wanted to "put Britain at the forefront of exploiting shale gas".

Waste sector impacts 

However, despite claims of being the ‘greenest government ever’, the two government departments with portfolios in waste, recycling and environmental protection are amongst the worst casualties of the cuts. 

Defra will have its departmental spending budget cut by 9.6 per cent, while the Department for Communities and Local Government had both its communities and local government resource budgets cut by 10 per cent. However, despite the cuts, Osborne announced that Council Tax rates will be frozen for 2014/15 and 2015/16, putting further strain on councils’ ability to raise money for expensive frontline services, such as waste management. 

Speaking of the cuts, Chairman of the Local Government Association (LGA), Sir Merrick Cockell said: "Today's 10 per cent cash cut comes on top of the 33 per cent real-terms cut already made to council budgets and confirms local government as the hardest hit part of the public sector. Local services on which people rely will have to be significantly reduced as a result. No area of spending can be totally immune and some services will be wound down entirely. 

"It's disappointing that a feudal approach still exists in relation to local government funding. Vital services are being damaged because councils do not have a seat at the table to negotiate a fair deal for local communities.” 

Deputy Chief Executive of the Chartered Institution of Wastes Management (CIWM) Chris Murphy added: “We knew that this Spending Review would herald more tough cuts once again, but it is disappointing to see that the two key departments of critical importance to the waste sector are once again among the hardest hit… 

“[C]uts in the region of 10 per cent and the extension of the Council Tax cap could seriously impact on [local authorities’] ability to maintain current collection, recycling and local environmental quality services, let alone improve them. Not only are we already seeing evidence that suggest[s] recycling performance is stalling, but we also have to recognise that we have already picked the low-hanging fruit; further behaviour change on both recycling and waste prevention will require more effort and resources. 

“Increased efficiencies and savings through partnership working will be critical, but these can only deliver so much, and this is a front line service area where more support and investment is needed, not less.” 

Defra cuts 

Murphy added that CIWM has voiced “unease” about Defra’s ability to deliver results within its current resources, and that this “unease” has only increased with the announcement of the administration budget being cut by a further 9.6 per cent. 

Earlier this week, members of the waste and resources management sector, including CIWM and the Resource Association (RA), wrote to Defra Resources Minister Lord de Mauley to urge him to ensure that funding for waste crime prevention (under the remit of the Environment Agency (EA), funded by Defra) did not become a ‘casualty’ of the Spending Review. Details of where Defra cuts will fall have not yet been released. 

Speaking of Osborne’s announcement, Chief Executive of the RA, Ray Georgeson, said: “It always looked like it would be a tough cut for Defra and this has proved to be the case. We recognise the need for toughness in reducing public spending but are concerned that cuts in the wrong places could lead to flatlining of the progress we have made in recent years on recycling and resource efficiency.

“There is much still to do to reach European best practice levels of recycling and resource efficiency… All of this and more needs clarity, leadership and support from government to help industry play its full part. In a diminishing funding regime for Defra, all of this will be even harder to achieve, despite the valiant efforts of many.

“It means that the spending that is available (for example to WRAP and the EA) will need to be even more focused on what is really needed to deliver green growth and boost the UK economy and employment. We await the outcome of the Defra Review of WRAP with great interest, and hope that it has a renewed focus on supporting green growth and the potential of UK manufacturers to build capacity, utilise more recyclate and reduce the resource security and export dependency concerns held by many.” 

Chief Secretary to the Treasury Danny Alexander is expected to set out more on government capital plans tomorrow (27 June).

Read more about the ‘Spending Round’ for 2015/16.