The government has set itself the target of building hundreds of thousands of new homes, finding £12bn of savings from working-age benefits, creating two million jobs and abolishing youth unemployment.
As I begin my term as chair of the LGA , my message is clear: councils stand ready to work with government and have an indispensable role in delivering these goals. But without reform, we predict councils will face a funding gap of £9.5bn by the end of the decade.
Unless there is a radical shift in the how public money is raised and spent, LGA analysis shows that councils could face a £3.3bn reduction in central government funding for local services in 2016-17. Further reductions will leave councils having to make difficult decisions about services.
The spending review this autumn will shape the future of our public services over the next decade. Its goal should be how we can spend smarter, rather than spend less.
That is the central theme of our new report, A shared commitment: local government and the spending review, which we launch in Harrogate today. It outlines how radically devolving powers and funding to local areas will allow councils to build new homes, increase employment, support elderly and disabled people to live healthy, independent lives – and save the taxpayer money at the same time.
Without this, the government’s wider fiscal and economic goals simply cannot be achieved.
An adequately funded adult social care system is essential to a sustainable NHS. The social care funding gap – growing by at least £700m a year – needs to be closed to protect services. The Better Care Fund needs to be expanded and supplemented by a separate £1bn transformation fund. This would pay for preventative services to alleviate pressure on the NHS and can be funded through a share of VAT raised from sugary snacks and drinks.
If the government is to meet its pledge to build 275,000 affordable homes by 2020, councils need to be given the power to play a leading role. We need more flexibility to borrow, to allow us to invest in housing. We need the freedom to set right-to-buy discounts and retain 100% of the receipts locally in order to replace housing sold through the scheme quickly.
A growing skills crisis in the construction industry threatens to undermine our efforts to build desperately needed homes. For too long we have trained too many hairdressers and not enough bricklayers. Demand for skills within the construction industry is up 54% since 2013, and there are 58% fewer completed construction apprenticeships today than in 2009.
The post-16 education budget and apprenticeship grant for employers should both be transferred to local areas to allow councils, schools and colleges to work together and ensure young and unemployed people develop vital building skills.
This local approach to skills and training will also allow councils to significantly reduce youth unemployment and disengagement. We predict it would also contribute to reducing the welfare bill by up to £1bn and add £374bn of lost growth to the economy.
The old equation was that councils had to protect services while cutting budgets. The new partnership we are outlining today would allow us to tackle the big issues facing our residents and boost the prospects of the nation as a whole.
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