March 2015 Budget: implications for public sector lawyers | Practical Law

March 2015 Budget: implications for public sector lawyers | Practical Law

A legal update on the March 2015 Budget announcements of interest to public sector lawyers.

March 2015 Budget: implications for public sector lawyers

Practical Law UK Legal Update 4-604-7711 (Approx. 7 pages)

March 2015 Budget: implications for public sector lawyers

Published on 18 Mar 2015United Kingdom
A legal update on the March 2015 Budget announcements of interest to public sector lawyers.

Speedread

On 18 March 2015, the Chancellor, George Osborne, made his Budget Statement to the House of Commons.
The statement included various policy announcements of interest to public sector lawyers, for example:
  • Pilot schemes that will enable local authorities in Cambridgeshire and Peterborough and (subject to the formal approval of Greater Manchester Combined Authority) in Greater Manchester and Cheshire East to retain 100% of any additional business rate growth beyond expected forecasts.
  • The establishment of a central body that will own and manage the central government estate. Government departments will pay market-level rents for the freehold assets they own, to provide them with greater incentives to rationalise the space that they occupy.
  • The launch of a consultation into the compulsory purchase regime intended to make it clearer, faster and fairer and to support brownfield development.
Initial reaction to the Budget Statement from local government has been to welcome the review of business rates and the further progress in devolving more powers to a local level, but at the same time to call for further, more substantial steps to be taken in both cases.

March 2015 Budget

On 18 March 2015, the Chancellor, George Osborne, made his Budget Statement to the House of Commons.
This update covers the announcements of most interest to those working in public sector organisations. However, for an overview of all the March 2015 Budget announcements, see Practical Law 2015 Budget coverage..

Specific policy announcements of interest to public sector lawyers

Announcements of interest to those in the public sector were made in the following areas.

Public sector efficiency

The government is still focused on cutting the national deficit and on public sector net debt falling as a share of GDP. Control of public spending is central to this, which the March 2015 Budget aims to bring about by:
  • Confirming that proposals have been agreed with all departments to abolish progression pay across the Civil Service.
  • Expanding the use of benchmarking public service performance as a means to identify savings.
  • Launching two pilots in Leeds City Region and Greater Manchester in 2015-16, to trial local sharing initiatives in the areas of shared transport, shared public space, and health and social care.
  • The implementation of a new commercially-driven approach to land and property asset management across the central government estate, based on departments paying market-level rents for the freehold assets they own, to provide them with greater incentives to rationalise the space they occupy. A new central body or bodies, working under the Treasury and the Government Property Unit of the Cabinet Office, will own and manage relevant property and land assets, as well as leasehold assets where appropriate. This is intended to drive better strategic oversight and management of the estate and also deliver efficiencies, and release land and property for productive use. Implementation of the reform will commence immediately, with the model becoming operational by March 2017, subject to legislation.
  • The implementation of a similar market-level rent charging system by the Ministry of Defence for its own estate.
  • The exploration, with the Local Government Association and partner organisations in Scotland, Northern Ireland and Wales, of the extension of a national platform to advertise spare central and local government space to businesses, individuals and community groups in the most efficient way.
  • Exploring how to take forward measures to encourage the retention of cases in the magistrates' courts rather than sending them to the Crown Courts, to improve efficiency and reduce costs in the court system.

Public procurement

  • The government intends to extend use of the Prompt Payment Code to cover wider poor payment practices, for example in relation to the use of supplier lists.
  • The government will ask its strategic suppliers to report quarterly on their payment practices from April 2015, and ask all central government departments to report quarterly on their payment performance from April 2015. This is intended to bring greater transparency to government payment practices.
  • The government will update its procurement frameworks to enable government employees to use sharing economy solutions to book accommodation and transport when travelling on official business, where this represents value for money. This will be effective by autumn 2015.

Local growth and devolution

  • In relation to the new devolution arrangements for Wales announced on 27 February 2015, the March 2015 Budget states that work has already started on the floor in the level of relative funding the UK government provides to the Welsh Government and the details will be agreed in the next Parliament.
  • The Scottish and Welsh governments' sources of borrowing are being extended to include bond issuance for capital investment. These powers will be within existing borrowing limits, and subject to a number of conditions, including that the Scottish and Welsh governments will be solely responsible for meeting their liabilities and that the UK government will provide no guarantee on any bonds issued.
  • The City Deal model is being extended, with the government opening negotiations with local partners and the Scottish and Welsh governments for City Deals for Cardiff, Aberdeen and Inverness. In Inverness, the government is making funding available in 2015-16 to help progress the deal.
  • Regional growth is being encouraged by the devolution of power to Greater Manchester, which includes the creation of a new directly elected metro Mayor. Power over transport, skills and business support will be devolved to Sheffield.
  • £20 million is to be invested over four years to fund the establishment of four pilot Connected Health Cities, as part of the foundation stage of the Health North project.
  • A new devolution deal with the West Yorkshire Combined Authority will give West Yorkshire new powers over skills, business support and transport.
  • The government is devolving further powers to the Mayor of London, including over planning and skills. This is intended to allow the Mayor to accelerate the provision of new homes by reducing planning delays, and to tailor decisions over skills provision to London's needs.
  • The Mayor of London and the Greater London Authority are to be given power over the budget for the Apprenticeship Grant for Employers and a role in the re-commissioning of Further Education skills provision in the capital.

Business rates

  • The government has published a review of business rates (see Legal update, HM Treasury publishes consultation paper on business rates review). As part of this review, the March 2015 Budget announced pilot schemes in Cambridgeshire and Peterborough and, subject to the formal approval of Greater Manchester Combined Authority, in Greater Manchester and Cheshire East. These pilots will enable these areas to retain 100% of any additional business rate growth beyond expected forecasts. The pilots will begin in April 2015 and will reward additional growth to the local business rate base whilst maintaining the nationwide business rate retention and redistribution system.
  • There will also be £97 million of funding and ring fencing of the local 50% share of business rate growth to support the London Borough of Barnet and the Greater London Authority's plans for the regeneration of Brent Cross.
  • The government will consult on whether to introduce a business rates relief for local newspapers in England, in order to support them as a source of information for local communities as they adapt to new technology and changing circumstances. This supports the government's general policy of supporting local newspapers by restricting local authorities from publishing their own competing newspapers (see Legal update, Authority served with direction requiring compliance with local authority publicity code).
  • The government will encourage local authorities to use their business rates discretionary relief powers to support the sharing economy, including the use of shared workspaces.

Housing

  • The government is designating the first 20 housing zones outside London, and continuing to work with the other eight previously shortlisted housing zone areas.
  • The March 2015 Budget provides £1 million to allow the London Land Commission to create a comprehensive database of public sector and brownfield land. £7 million will also be provided to the Greater London Authority to support the development of the Croydon Growth Zone.
  • The government intends to make it easier for individuals to sub-let a room by legislating to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis. The March 2015 Budget states that the government will also consider extending this prohibition to statutory periodic tenancies. The government states that it will amend its model agreement for an assured shorthold tenancy by Summer 2015, to provide that tenants in private rented accommodation can request their landlord's permission to sub-let or otherwise share space on a short-term basis.
  • The government will look to set departmental contributions to the sale of surplus public sector land by the Spending Round. It has already committed to releasing land with capacity for up to 150,000 homes between 2015 and 2020.

Digital services

  • The government will create a joint venture to host government departments' non-cloud based servers, to prevent individual departments paying different amounts to build their own data centres or to outsource this service.
  • HM Treasury, the Department for Communities and Local Government and the Government Digital Service will collaborate with partners in local government to develop digitally-focused and efficient local services.
  • The government will implement "GOV.UK Verify" across central government. This allows people to prove their identity online when using government services with the aim of reducing duplication, with departments using the same tool for their digital services.
  • The government will implement a centralised operational management system for public sector spectrum, to better prioritise spectrum management, and maximise the economic value of public sector spectrum.
  • There will be further measures to support the delivery of broadband in rural areas including looking to raise the Universal Service Obligation (the legal entitlement to a basic service) from dialup speeds to 5 Mpbs broadband, and subsidising the costs of installing superfast-capable satellite services. The government has stated that its new ambition is that ultrafast broadband of at least 100 Megabits per second should be available to nearly all UK premises.
  • The government will provide £7.4 million funding to support libraries in England to provide internet access and WiFi.

Education and health

The government announced several measures aimed at helping schools to improve their efficiency, including:
  • Re-launching the updated Crown Commercial Service school energy supply procurement framework.
  • The provision by the Department for Education of a new indicator for schools to allow them to compare their overall efficiency and allowing parents to access school benchmarking tools.
  • Piloting a cost comparison tool in 2015 to help schools identify a target price for their most commonly purchased items.
The government also stated that measures set out in Lord Carter's review of NHS efficiency in areas including procurement, pharmacy and property, could deliver significant savings.

Vulnerable people

The March 2015 Budget states that the government is exploring the cost-effectiveness of options to integrate spending around some of the most vulnerable groups of people, including:
  • Continuing to join up services for people with health and social care needs by taking the next steps on from the Better Care Fund.
  • Exploring whether improving housing can help people with care needs stay in their homes longer and reduce costs to the NHS.
  • Supporting individuals struggling with homelessness, addiction and mental health problems.
  • Additional funding for children's mental health services in England, to ensure that by 2018-19 there are talking therapists in every part of the country and that there is better access to children's mental health services.
  • Considering options to support long-term investment in private rented accommodation for homeless families.

Planning

  • The March 2015 Budget saw the launch of a consultation into the compulsory purchase regime to make it clearer, faster and fairer. This is intended to support the government's commitment to improving the consenting and planning processes for applicants and claimants, to support brownfield development.
  • In March 2015, the government will update its planning guidance to local authorities to clarify that it should be possible for non-residential properties to rent out their existing parking spaces without requiring planning permission, provided there are no substantive planning concerns.
For more information on the property and planning announcements, see Legal update, March 2015 Budget: key property announcements.

Environment

  • The government will launch a nationwide £1 million fund to support schemes that will promote the growth of the forestry industry in their region and that have the support of their Local Enterprise Partnership.
For more information on the environmental announcements, see Legal update, March 2015 Budget: key environmental announcements.

Comment

Initial reaction to the budget from local government has been to welcome the review of business rates and the further progress in devolving more powers to a local level, but at the same time to call for further, more substantial steps to be taken in both cases, the Local Government Association (LGA) Chair Councillor David Sparks commented that:
"Central government needs to seize the opportunity presented by the review of business rates to create a more effective local tax where rates and discounts are set locally and councils have much more freedom to support small firms"
and that:
"Economists, business leaders and councillors all agree that a much bigger and faster approach to devolution for all places - both inside and outside our big cities - is essential for the economy and survival of good quality public services".