2015 Autumn Statement and Spending Review: key public sector announcements

Practical Law UK Legal Update 9-620-4609 (Approx. 16 pages)

2015 Autumn Statement and Spending Review: key public sector announcements

2015 Autumn Statement and Spending Review

On 25 November 2015, the Chancellor of the Exchequer, George Osborne, delivered a combined Spending Review and Autumn Statement (SRAS 2015). This update analyses the key implications for the public sector.

For an analysis of other aspects of the SRAS 2015, see Further reading below. Practical Law's full coverage can be found at: 2015 Autumn Statement.

Adult social care

The SRAS 2015 creates a social care precept to give local authorities that are responsible for adult social care the ability to raise new funding to spend exclusively on adult social care. This will give local authorities the flexibility to raise council tax in their area by up to 2% above the existing threshold. Social care funds for local government will be made available from 2017, rising to £1.5 billion by 2019-20, to be included in an improved Better Care Fund. Taken together, this is intended to provide local authorities with the funding they need to increase social care spending so that they can focus on core services and increase the prices they pay for care. This also includes the costs of increasing pay for care workers, up to the National Living Wage.

The SRAS 2015 also contains measures that are aimed at improving care for older and disabled people and support for their carers. In support of the principles of wellbeing, prevention and delaying needs for care and support in the Care Act 2014, the SRAS 2015 includes the announcement of over £500 million by 2019-20 for the Disabled Facilities Grant, which will fund around 85,000 home adaptations that year. This is expected to prevent 8,500 people from being admitted into a care home in that 2019-20.

The government has pledged its commitment to introduce the Dilnot reforms to adult social care. The cap on care costs due to be implemented in 2016 has been deferred to 2020 (see Legal update, Cap on care costs delayed until 2020). The SRAS 2015 states that the government will provide funding to local authorities to cover the costs of local authorities preparing to implement these changes, which will be introduced and funded from April 2020.

Benefits and pensions

Benefits

The SRAS 2015 states that the government will create higher wages, lower taxes and lower welfare, saving £12 billion on welfare bills by 2019-20. The government has announced that it is not proceeding with the changes to the tax credit threshold and taper announced in the Summer Budget 2015. The tax credits income threshold will remain at £6,420 from April 2016 and the tax credits taper will remain at 41% of gross income.

This is intended to give families longer to adjust to the welfare cap introduced in the Budget 2014, although the government says that it has taken action to ensure the cap is met in the medium term, and it will retain the welfare cap at the current level. The government intends to bring forward a debate on a votable motion on welfare spending in the House of Commons.

As a step towards attempting to increase public sector efficiency, the government will introduce a live webchat function to answer queries about benefit claims, rather than doing this over the telephone, as part of the Universal Credit Digital Service (see Public sector efficiency challenge).

There will also be steps to reduce benefits fraud and error, such as:

Consulting on ways to make the requirement for someone to make a joint claim for benefits and tax credits clearer and more objective.
Extending funding to the end of 2017-18 to reward local authorities for reducing fraud and error in Housing Benefit (see Practice note, Prosecuting housing benefit fraud cases: procedure).

Also in relation to Housing Benefit, the SRAS 2015 states that the government will:

Cap the amount of rent that Housing Benefit will cover in the social rented sector to the relevant Local Housing Allowance, which is the rate paid to private renters on Housing Benefit. This will include the Shared Accommodation Rate for single claimants aged under 35 without dependent children. The cap will apply from 1 April 2018 but only to tenancies signed after 1 April 2016.
Limit Housing Benefit and Pension Credit payments to four weeks for claimants who are outside Great Britain, from April 2016.

For more information on the housing reforms in the SRAS 2015, see Housing.

Pensions

The SRAS 2015 states that the government will increase the basic state pension by the "triple lock" to £119.30 a week in April 2016.

From April 2016, the poorest pensioners reaching pensionable age will receive a new, simplified, "single-tier" pension with a starting rate of £155.65. Those reaching pensionable age before the reforms are introduced will receive their state pension in line with the current rules.

The single rate of the Standard Minimum Guarantee will increase by £4.40 to £155.60 per week in April 2016, a larger rise than the increase in the full basic state pension. By adjusting the savings credit threshold, the pension credit awards for those currently receiving savings credit will be frozen where income is unchanged.

To simplify the administration of automatic enrolment into pension schemes, the next two phases of minimum contribution rate increases will now occur in April so that they are aligned to the tax year.

The SRAS 2015 states that it will today publish guidance for pooling Local Government Pension Scheme Fund assets into up to six British Wealth Funds, containing at least £25 billion of Scheme assets each.

For more information on public sector pensions, see Practice note, Overview of pension schemes in the public sector.

Devolution in England

Devolution deals

The SRAS 2015 sets out details of the further devolution agreements that have been reached with civic leaders in:

The Sheffield City Region.
The North East.
Tees Valley.
Liverpool City Region.
West Midlands

It also refers to the government's further progress on devolving powers to Greater Manchester, which includes supporting the Greater Manchester Combined Authority to develop and implement an integrated approach to preventative services for children and giving the Greater Manchester Mayor the power to introduce a Community Infrastructure Levy. For more information, see Legal update, July 2015 Budget: implications for local government: Local growth and devolution.

Northern Powerhouse

The government's proposals for a Northern Powerhouse are based on the theory that individual cities and towns of the North could be stronger if they pooled their strengths. In order to achieve this, the government is proposing to spend £13 billion on better transport in the North over this Parliament.

Devolution in Scotland and Wales

The SRAS 2015 sets out the government's proposals to fundamentally change the way the country is run particularly in relation to Scotland and Wales.

Scotland

The Scotland Bill 2015-16, containing significant tax and spending powers, is on track to receive Royal Assent in early 2016 (see Legal update, Scotland Bill 2015-16 introduced into Parliament: business tax implications).

Wales

The government is proposing to introduce a floor in the level of relative funding provided to the Welsh Government at 115% of comparable spending per head in England. The funding arrangements in the next Parliament will need to take account of the Welsh Government's new powers and responsibilities, given the significant impact that tax devolution could have on its funding.

Digitisation and information

Judicial system

As part of the government's efforts to modernise state services, the SRAS 2015 states that the government will increase its total investment to more than £700 million to attempt to modernise the courts and tribunals system, speed up justice and deliver savings of £200 million a year from 2019-20. It will aim to modernise and fully digitise the courts, moving from a paper-based to an online system.

In particular, the government will take action to attempt to create a fully integrated criminal justice system, based around a common digital platform from police stations to court rooms, which is intended to eliminate the need for over half a million pre-trial hearings in the criminal courts, and significantly reduce court hearing times and the time spent on basic administrative functions.

The SRAS 2015 also states that the government will sell some underused courts to release land for new homes and refurbish existing courts (see Planning and public sector land).

Digital technology projects

The government plans to invest £1.8 billion in digital technology and transformation projects across the public sector over the next four years. It intends to replace tax returns with digital tax accounts and build one simple payment mechanism for all central government services, including passports, driving licences and motoring fees.

The SRAS 2015 states that the government will provide the Government Digital Service (GDS) with £450 million. It is planned that the GDS will create common platforms such as GOV.UK Pay, which is intended to simplify hundreds of different payment systems, making it easier for businesses and citizens to pay government. The government states that its ambition is for citizens to have the option to pay online for every central government service by 2020. The GDS will also continue to act as the digital, data and technology centre for government, supporting departments as they transform their business operations, setting best practice and ensuring quality of services.

The SRAS 2015 states that the Common Technology Services programme will deliver flexible and modern technology for the entire Civil Service, which aims to open up more government contracts to suppliers and save money for taxpayers.

There are specific proposals in the SRAS 2015 related to the digitisation of the tax system, including the investment of £1.3 billion in Her Majesty's Revenue and Customs (HMRC), to give access to digital tax accounts for all small businesses and individuals by 2016-17. The government will require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account by 2020.

Transparency and government data

The SRAS 2015 states that the government will consult on updating the Local Government Transparency Code 2015, and take further measures to enforce compliance with transparency requirements where necessary, in order to encourage local authorities to release surplus assets and invest in making their services more efficient. For more information on reforms to local government in the SRAS 2015, see Local government.

As part of the public sector efficiency challenge, the SRAS states that the Department for Environment, Food and Rural Affairs (Defra) will open up 8,000 datasets over the next year as a starting point. This is intended to enable citizens and businesses to make better use of data to protect the environment and drive innovation in food and farming. For more information on public sector transparency, see Practice note, Public sector transparency programme and future transparency developments.

Education, skills and children

The government makes clear that the aim of the SRAS 2015 is to prioritise investment in children's education from childcare to college so that all children, whatever their backgrounds, are given the best chance to succeed. The SRAS 2015 states that total spending on education, including childcare, will increase in cash terms from £60 billion in 2015-16 to nearly £65 billion in 2020. In addition to making these investments in childcare and apprenticeships, the government intends to protect the schools budget in real terms and the national base rate per student for 16 to 19 year olds.

Improving standards in education

The SRAS 2015 makes clear that the government's focus is on improving standards in education, by reforming funding to make the allocation of funds fairer and by improving the quality of education providers. The SRAS 2015 states that support for working families will be provided by continuing free school meals for all infants (stated to save families around £400 for every infant each year).

In order to tackle truancy, the governing is proposing to recover unpaid truancy penalties from families' child benefit or through the courts where they do not receive child benefit. For more information on the government's proposals, see Blog, Government announces child benefit deductions in tougher approach to truancy.

Childcare costs

From 2019-20, the government proposes spending over £6 billion a year supporting parents with their childcare costs. This includes doubling the free childcare entitlement from 15 to 30 hours per week for working families with three and four-year olds, with effect from September 2017. The SRAS 2015 sets an upper income limit per parent of £100,000 and a minimum weekly income level per parent equivalent to 16 hours. For more information, see Legal update, Childcare Bill 2015-16 proposes changes to free childcare provision.

The SRAS 2015 sets out the government's plans to introduce tax-free childcare from early 2017, which will provide up to £2,000 a year per child to help working parents with their childcare costs (see Legal update, Tax-free childcare scheme to launch in 2017).

Following its review of the cost of childcare provision, the government proposes to invest £300 million to increase the average hourly rate that childcare providers receive and a minimum of £50 million of capital funding to create additional nursery places. To ensure that funding is fairly allocated, a national early years funding formula and other reforms will be introduced.

Children's services

The government proposes to maintain in cash terms the Department for Education's central children's services budget at over £300 million per year and hopes that this will help to drive up social care workforce standards to improve support for vulnerable children.

Schools

The aim of the SRAS 2015 is to protect the core schools budget in real terms, enabling the per pupil rate for the Dedicated Schools Grant to be protected in cash terms. This is stated to include £390 million of additional funding given to the least fairly funded areas in 2015-16. The pupil premium will also be protected at current rates.

The government also proposes to introduce the first ever national funding formula for schools, high needs and early years, so that funding is transparent and fairly linked to children's needs. This reform will be consulted upon in 2016 with a view to implementing the new formula from 2017-18 and will:

End the unfair system where a child from a disadvantaged background in one school attracts half as much funding as a child in identical circumstances in another school, simply because of where they live.
Give schools more certainty over future budgets, empowering head teachers to take long-term decisions.

There will be a transitional period to help smooth the implementation of the new formula.

The SRAS 2015 also sets out the government's plans to invest:

£23 billion in school buildings, the opening of 500 new free schools, the creation of 600,000 school places, the rebuilding and refurbishing of more than 500 schools and addressing essential maintenance needs.
In new school places for children with special educational needs and disabilities.

The SRAS 2015 sets out the government's next step towards its goal of ending local authorities' role in running schools and all schools becoming academies. It is hoped that this proposal will accelerate the government's reform programme, giving more power to teachers.

In order to attract new teachers into the profession, particularly to teach science, technology, engineering and mathematics, and to deliver the English Baccalaureate and to raise educational standards for young people, the SRAS 2015 provides investment of over £1.3 billion up to 2019-20.

Investing in skills to equip young people for the future

For the rest of the current Parliament, the SRAS 2015 proposes protecting in cash terms the current national base rate per student for 16 to 19 year olds in school sixth forms, sixth form colleges and further education colleges in England. As part of the government's one-off restructuring of post-16 education and training, sixth form colleges in England will be given the opportunity to become academies, allowing them to recover their non-business VAT costs. Such institutions will have the option of joining a multi-academy trust if they choose to. It is hoped that this will help drive up standards and improve efficiency of 16-19 education by enabling further collaboration between schools and sixth form colleges.

Employment

Public sector workforce

The SRAS 2015 states that the government intends to continue to reform areas in which the public sector still has more generous rights than the private sector. It will:

Consult on further cross-public sector action on exit payment terms, to reduce the costs of redundancy payouts and ensure greater consistency between workforces.
Review sickness absence in public sector workforces before consulting on how to reduce its impact on public service delivery, and consider legislation where necessary.

Paper payslips for central government workers are also intended to be phased out completely, which the SRAS 2015 states will save at least £500,000 a year in unnecessary printing costs. This will be subject to a minority of cases where individuals still have a good reason to access paper payslips (see Public sector efficiency challenge).

Jobseekers

As part of the government's efforts to increase the employment rate, the SRAS 2015 states that:

Universal Credit will extend the same Jobcentre Plus support that people on Jobseeker's Allowance receive to 1.3 million additional claimants by 2020.
Jobseekers will be required to attend the Jobcentre weekly for the first three months of their claim and the more intensive support element of the Help to Work programme currently in place for the long-term unemployed will be brought forward.
A new Work and Health Programme will be introduced after current Work Programme and Work Choice contracts end, to provide specialist support for claimants with health conditions or disabilities and those unemployed for over two years.

There will be a real term increase in funding to help people with disabilities and health conditions to get work and remain in work and the government will publish a White Paper in the new year that will set out reforms to improve support for people with health conditions.

Apprenticeships

The SRAS 2015 states that, by 2020, three million apprenticeships will have started. The government proposes that, by 2019-20, its spending on apprenticeships, including income from the new apprenticeship levy, will be double the level of spending in 2010-11 in cash terms.

The apprenticeship levy on larger employers announced in the summer budget (see Legal update, July 2015 Budget: key employment announcements) will be introduced in April 2017. It will be set at a rate of 0.5% of an employer's paybill and each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any paybill in excess of £3 million and that less than 2% of UK employers will pay it.

Energy and environment

The SRAS 2015 states that the government will:

Increase funding for the Renewable Heat Incentive to £1.15 billion by 2020-21 and reform the scheme to deliver better value for money.
The government will commit up to 10% of shale gas tax revenues to a Shale Wealth Fund. The fund will deliver up to £1 billion of investment in local communities hosting shale gas developments.
Continue to prioritise investment in flood defences through its £2.3 billion capital programme, which will invest in over 1,500 schemes with the intention of giving 300,000 homes greater security from flooding by 2021.
Protect flood defence maintenance funding and Department for Environment, Food and Rural Affairs (Defra) will work with the Environment Agency to generate 10% efficiencies by 2019-20 with all savings reinvested to better protect another 4,000 homes.

Greater collaboration and integration in public services

The SRAS 2015 sets out the steps that the government has taken to integrate public services by encouraging greater collaboration between public services in order to help drive out public sector inefficiences. In addition, the government proposes:

Expanding support for Social Impact Bonds, investing £105 million over the term of this Parliament to help deal with issues including homelessness, poor mental health and youth unemployment.
Introducing a new statutory duty for the emergency services to collaborate by early 2017, subject to parliamentary approval, on areas such as procurement, new stations and vehicle maintenance.
Bringing forward legislation to enable Police and Crime Commissioners (PCCs) to take on responsibility for fire and rescue services, subject to a clear business case and local support, with local fire services providing the necessary information for PCCs to develop the business case.

Health

The SRAS 2015 announced a significant investment in the health care system to ensure sustainable care for families across the country for seven days a week. The NHS will receive a £10 billion increase in England between 2014 and 2015, of which £6 billion will be delivered by the end of 2016-17 and £4.8 billion capital funding will be given every year for the next five years.

The SRAS 2015 contains measures to further the government's aim of joining up health and social care. The government will continue with the Better Care Fund that was established in the Spending Round 2013, which has driven the integration of funding and social care and enabled services to be commissioned for the first time. From 2017 the government will make funding available to local government worth £1.5 billion in 2019-20 to be included in the Better Care Fund.

The government intends to integrate health and social care services by 2020. Each part of the country will be required to develop plans for this by 2017, to be implemented by 2020. Local areas will integrate in different ways using a range of models that the government will support.

An additional £600 million will be invested in mental health services so that significantly more people have access to talking therapies every year by 2020. NHS England's Mental Health Taskforce will report in early 2016 and the government will work with them to set out its plans, including for perinatal mental health and coverage of crisis care.

Housing

The SRAS 2015 states that the government intends to double the housing budget from 2018-19 and sets out "the most ambitious plan since the 1970s to build homes that support working people in their aim to buy their own home". It is estimated that the government's plans will amount to over a £20 billion investment in housing over the Spending Review period.

In order to facilitate this, the government has laid out a five-point plan for housing proposing to:

Begin building 400,000 affordable houses by 2020-21. These properties will be focused on low cost home ownership and will include:
- 200,000 Starter Homes sold at a 20% discount compared to market value. These will be sold to young first-time buyers. The government will set up a £2.3 billion fund to support the delivery of up to 60,000 of these properties;
- 135,000 Help to Buy: shared ownership homes. These will be available to all households earning less than £80,000 (outside London) and £90,000 (in London). The government also proposes relaxing and removing previous restrictions on such schemes;
- 10,000 homes allowing tenants to save for a deposit while they rent (this is in addition to the 50,000 affordable homes from existing commitments); and
- at least 8,000 specialist homes for older people and people with disabilities.
To further enable this level of house building, the SRAS 2015 also confirms that the government will remove constraints currently preventing the private sector from participating in delivery of these programmes (for example, restrictions on the ability to bid for government funding).

Deliver the government's manifesto commitment to extend the right to buy to housing association tenants (see Practice note, Right to buy: the process: Extending the right to buy to housing association tenants). The government proposes to launch a pilot of the extension with five housing associations to work out how the final scheme should operate.
Accelerate housing supply and building by bringing forward further reforms to the planning system, including establishing a new delivery test for local authorities, in order to ensure delivery against the number of homes set out in local plans within a reasonable time frame (see Legal update, Fixing the foundations: key planning announcements).
Extend the Help to Buy: equity loan scheme to 2021 and create a London Help to Buy scheme. The London Help to Buy scheme will offer a 40% equity loan in recognition of the higher housing costs in the capital and enable buyers with a 5% deposit to obtain a loan of up to 40% of the value of a new build home, interest-free for five years. For more information, see HM Treasury and DCLG press release, Help to Buy: new announcements, 25 November 2015.
The new scheme can also be used in conjunction with the new Help to Buy ISA, which will launch on 1 December 2015. The new ISA allows first time buyers to receive a 25% government bonus in addition to their own savings (up to a maximum government bonus of £3,000), which can then be put towards the purchase of their first home.
Impose higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties from 1 April 2016. The SDLT payable on such properties will be 3% above the current SDLT rates. £60 million of the additional tax collected will go towards communities in England where the impact of second homes is particularly acute. The tax receipts will also help towards the costs associated with doubling the affordable housing budget.

The government has also announced that it plans to consult on reforms to the New Homes Bonus including by improving the incentives offered to communities building additional homes and by reducing the length of payments from six to four years. This will include a preferred option for savings of at least £800 million, which can be used for social care. Details of these reforms will be set out as part of a local government finance settlement consultation, which will include consideration of proposals to introduce a floor to ensure that no authority loses out disproportionately.

Homelessness

The government has announced that it will increase the funding available to invest in the reduction and prevention of homelessness, including by:

Protecting Department for Communities and Local Government (DCLG) funding for targeted homelessness intervention.
Devolving an increased level of funding to local authorities and ending the current management fee for temporary accommodation, giving them greater flexibility to invest in homelessness prevention measures.
Providing £40 million for services for victims of domestic abuse.

Discretionary Housing Payments

The SRAS 2015 also states that the government will make additional Discretionary Housing Payments (DHP) available to local authorities to protect the most vulnerable, including those in supported accommodation. This is particularly interesting given the High Court decision last year in Rutherford and others v Secretary of State for Work and Pensions [2014] EWHC 1613, where it was held that a scheme (such as the bedroom tax scheme) would be lawful provided that those who would suffer discrimination without DHPs, continue to receive them to make good any shortfall (see Legal update, Bedroom tax was justified as payment of DHPs overcame discrimination (High Court)).

Local government reform

In England, the government's proposals for devolution set out a new deal for local authorities. In return for local authorities making efficiency savings, the government proposes giving authorities greater power to generate growth for their areas by:

Allowing local government to keep the rates they collect from businesses (see Business rates).
Giving councils the power to cut business rates to boost growth.
Giving elected city-wide mayors the power to levy a business rates premium to pay for new local infrastructure projects, provided they have the support of the local business community

The SRAS 2015 states that, like other unprotected areas of spending, local government will need to make a contribution to fiscal consolidation to ensure that the country is able to live within its means. But while the main grant to local government will be phased out, this currently represents less than a quarter of local government total resources. Other sources of income such as council tax and business rates are forecast to grow in cash terms by £6.3 billion by 2019-20, based on the OBR's forecast for local authority self-financed expenditure.

The SRAS 2015 also includes an announcement on the various measures to help local authorities, with responsibility for adult social care, meet the needs of their population (see Adult social care and Housing).

Local growth

The SRAS 2015 refers to the government bringing together multiple sources of funding together into one single fund, the Local Growth Fund (LGF), which was originally created following the Heseltine Review (see Legal update, Heseltine review on economic growth published) and puts money under the direct control of business-led Local Enterprise Partnerships (LEPs). The government proposes to deliver its commitment to a £12 billion LGF between 2015-16 and 2020-21 and to allocate LGF allocations through Growth Deals. This has the effect of giving local areas greater control over public spending and the LGF empowers local communities to deliver growth by allowing them to respond flexibly to the specific opportunities in their area.

The government proposes creating 26 new enterprise zones, including expanding eight zones on the current programme. These include 15 zones in smaller towns and rural areas, spreading enterprise zone benefits to 108 sites across the country. This is in addition to the two announced earlier this year. For those applications that are unsuccessful, the government proposes providing feedback to the unsuccessful LEP and, where possible, the government will work with the LEP to consider how the proposals could be improved.

Business rates

The SRAS 2015 envisages that, by the end of this Parliament, local government will retain 100% of business rate revenues to fund local services, giving them control of £13 billion of additional local tax revenues and £26 billion in total business rate revenues. For more information, see Legal update, DCLG issues consultation on business rates retention and shale oil and gas.

The system of top-ups and tariffs that redistribute revenues between local authorities will be retained. However, it is proposed that the uniform business rate will be abolished and any local area will be able to cut business rates as much as they like, to win new jobs and generate wealth. The government hopes that changing the existing system of financing local government will strengthen incentives to boost growth, help attract business and create jobs.

The SRAS 2015 confirms that the DCLG will shortly consult on changes to the local government finance system to pave the way for the implementation of the 100% business rate retention by the end of the Parliament. The consultation will take into account the main resources currently available to councils, including council tax and business rates. As part of these reforms, the main local government grant will be phased out and additional responsibilities devolved to local authorities, empowering them to drive local economic growth and support their local community. For example, the government will also consider transferring responsibility for funding the administration of housing benefit for pensioners and Transport for London's capital projects to local government and will also consult on options to transfer responsibility for funding public health.

Council tax changes

In order to achieve the government's aim of a strong economy, the SRAS 2015 sets out the power that local councils will have to increase social care funding through a new 2% council tax precept. However, the central government grant to local authorities is to be phased out (see Adult social care).

Local government efficiency

The government is proposing to issue new guidance to local authorities encouraging them to rein in excessive chief executive salaries and to do more to drive efficiencies for local taxpayers.

In order to support growth and efficiency, the government intends to enable the release of public sector assets so that these can be used more productively. The latest data suggests that local authorities in England hold £225 billion of assets, including over £60 billion in property not used for schools or housing. Therefore, the SRAS 2015 states that local authorities will be able to dispose of potentially surplus assets and reinvest the money in their services that allow them to deliver more for less (such as in home improvements that can help keep older people from needing to go to hospital). However, the flexibility to use asset receipts for reform projects will be subject to a number of conditions, including limits on the years in which the flexibility will be offered and the qualifying criteria for reform projects.

The government will also:

Consult on updating the Local Government Transparency Code 2015 to require all local authorities to record details of their land and property assets in a consistent way on the government's electronic Property Information Management System (see Transparency and government data).
Extend the One Public Estate programme with £31 million to support local authorities to design more efficient asset management strategies (see Planning and public sector land).
Provide support to dispose of local authority sites that could be used for housing.

For more information on local growth and devolution, see Legal update, July 2015 Budget: implications for local government: Local growth and devolution.

Planning and public sector land

In order to facilitate the large scale house building that the government envisages, the SRAS 2015 states that a number of reforms will be made to the existing planning system, including the release of large amounts of public sector land.

The government has stated that it will:

Release public sector land that has capacity for 160,000 homes.
Ensure the release of unused and previously undeveloped commercial, retail, and industrial land for Starter Homes.
Support the regeneration of previously developed brownfield sites in the green belt by allowing them to be developed in the same way as other brownfield land, providing it contributes to Starter Homes, and subject to local consultation.
Back small and medium enterprise (SME) house builders by amending planning policy to support small sites, extending the £1 billion Builders' Finance Fund to 2020-21, and halving the length of the planning guarantee for minor developments.
Offer £2.3 billion in loans to help regenerate large council estates and to invest in infrastructure needed for major housing developments.
Invest £310 million to deliver the first new garden city at Ebbsfleet.
Release an additional £4.5 billion worth of surplus land and property assets which will contribute towards the government's target of £5 billion of receipts by 2020 (this land and these assets will be released by central government departments).

The SRAS 2015 also confirms that:

The Greater London Authority is disposing of land for a further 5,000 homes.
The government will set the contribution that local authorities must make in relation to disposing of land by the next Budget.
The Crown Estate anticipates selling land that could deliver a further 2,500 homes.
The Department for Work and Pensions (DWP) will reduce its estate footprint by 20% and HMRC will move from 170 offices to 13 larger regional centres over the next five years.
The government will centralise ownership of its estate to a central body and also begin charging departments market-level rents for freehold assets they currently own by March 2017. Central government land and property is expected to transfer to the new body by the end of this Parliament, the implementation of which will be led by Liz Peace.
The government will extend the One Public Estate programme with £31 million to support local authorities to design more efficient asset management strategies.
New guidance for best practice on property disposals for local authorities will be published by Budget 2016.
The government will ensure that local communities can allocate land for housing through neighbourhood plans, even if that land is not allocated in the local plan (for more on neighbourhood plans, see Practice note, National Planning Policy Framework (NPPF): an overview).
The government will strengthen the Right to Contest for local authority land and property (see Cabinet Office: Right to Contest - Detailed guidance)
The government will bring forward proposals for a more standardised approach to viability assessments, and extend the ability to appeal against unviable section 106 agreements to 2018.
The government will review the operation of the deemed discharge of planning conditions.

Police and law enforcement

Over the Spending Review period, the government proposes protecting overall police spending in real terms and allocating additional funding to those forces that have strong proposals to support efficiency and reform and to help future transition to new funding arrangements. It is anticipated that this funding will allow forces to adapt to changing crime threats and to train more firearms officers to ensure the country extends its capability to protect its citizens from terrorist threats.

Police and Crime Commissioners will be given greater flexibility in their local funding decisions by rewarding those areas that have historically kept council tax low. This will allow them to raise an additional £12 million per year compared to a 2% annual increase. Further, the government proposes helping forces to improve police efficiency by taking steps to drive down the cost of police procurement by up to £350 million and encouraging greater collaboration between police forces and other public and emergency services.

Public sector efficiency challenge

In August 2015, the government wrote to millions of public sector workers asking for their ideas on how to do more for less (HM Treasury: Public Sector Efficiency Challenge summary of responses and results (25 November 2015)). Over 22,000 suggestions were received. The government is taking forward a number to significantly improve public services as well as reduce costs, which include:

Supporting schools to save money on common items such as stationary or furniture, including exploring the option of a price-comparison website to reduce the time and resources schools have to invest in securing cost-effective deals.
Introducing a live web-chat offer to answer queries about benefit claims, rather than doing this over the telephone, as part of the Universal Credit Digital Service (see Digitisation and information).
Abolishing paper payslips in Whitehall, saving at least £500,000 a year in unnecessary printing costs; most departments are already issuing electronic payslips, but paper payslips will be phased out completely over the Spending Review period, with the exception of a minority of cases where individuals still have a good reason to access them.
As part of the move towards a paperless NHS, expanding the number of patients booking their GP appointments online (with 20% of patients using online GP services by 2018) and moving to fully electronic referrals.

Transport and infrastructure

The SRAS 2015 contains plans to invest in infrastructure, skills and science. It states that the government will exceed its commitment to invest £100 billion in infrastructure by 2020-21 and it will extend the availability of the £40 billion UK Guarantees Scheme to March 2021. It also contains plans to increase government departments' capital spending by £12 billion over the next five years.

The SRAS 2015 states that the government will increase transport investment by 50% to £61 billion over the term of the current Parliament. Investment in the Network Rail investment programme is confirmed, as well as capital expenditure of £46.7 billion over the next five years by the Department for Transport, which includes starting construction on High Speed 2 (HS2), £13.4 billion to continue to deliver the Roads Investment Strategy, and over £5 billion on roads maintenance.

£475 million will be provided over the next five years to fund large local transport projects. This is intended to enable local areas to bid for funding for projects that would be too expensive for them to pay for by themselves. £300 million will be available over the next five years for a new Transport Development Fund, to provide development funding for future transport infrastructure projects such as Crossrail 2 or proposals emerging from the Northern Transport Strategy.

Comment

Many government departments will experience significant cuts by 2019-20; departments such as the Ministry of Justice are having their administrative budgets downsized by up to 50%. This is likely to have a significant impact on day-to-day operations. The steps towards further devolution of power to Scotland, Wales and Northern Ireland are also likely to have a significant impact on how departments function.

Local authorities are likely to be pleased with the announcement that they will be able to increase social care funding through a new 2% council tax precept, which will help to raise the money needed to offset some of the cost of social care. However, the reality is that some authorities particularly in poorer areas may decide not to levy the extra council tax, meaning that deeper cuts to services will have to be made to cover the shortfall. The ability to raise new local taxes may also prove to be a poisoned chalice for some council members.

Allowing local authorities to retain 100% of their business rates income (rather than the current figure of 50%) may also help to ease some of the financial pressures they face, although the implementation of this change is stated to be by the end of this Parliament. However, as part of these reforms, the main local government grant will be phased out. The changes to the local government finance system that are needed are shortly to be the subject of a consultation document which is said will take into account the main resources that are currently available to councils.

Despite the announcements that more funding can be retained, the emphasis for the public sector is still on making further efficiency savings. This is likely to accelerate the search for efficiencies in back office functions that are already spread thin.

2015 Autumn Statement and Spending Review: key public sector announcements | Practical Law