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The big theme of today’s Autumn Statement was all about a ‘responsible recovery’ for the UK economy, with the Chancellor arguing that “the plan is working” but “there is more to be done”. So while there were announcements that economic growth is continuing, so will austerity. In fact, the Chancellor announced £3bn worth of additional austerity measures to be implemented over the next three years.
But what did the range of announcements mean for cities?
As usual it was a curate’s egg. While the announcement of two new City Deals (Greater Cambridge and Glasgow) and some specific measures to boost housing and growth were welcome, many of the policies announced are likely to fall short as they don’t take into account local variation or enable local areas to adapt policy according to their particular needs.
Take local government funding: not everywhere will be able to freeze council tax.Local government may have been protected from further cuts and not be expected to contribute to a £3bn savings target over the next three years, but that’s on the basis that they are expected to freeze council tax.
Some places will struggle to afford this: a number of councils I’ve spoken to are currently planning to increase council tax because, although in the short term they lose the government grant available for authorities that comply, over the medium to long term they cannot afford to lose out on the additional revenue. So will government recognise geographical variation, or will it insist that councils that increase council tax have to contribute to the savings?
Likewise, housing policies still do not recognise the differing needs of places.So while it is good news that the Chancellor increased the Housing Revenue Account borrowing limits by £150m each year for two years, and pledged to invest £1bn over six years in unlocking new housing sites, it’s vital there is a place-based approach to housing. Just as some places have housing estates facing bigger problems than others, so measures to increase house-building need to be targeted on the least affordable areas with highest demand.
Disparities in housing costs across the country also mean that the welfare cap will have a very different effect on different places, with those living in cities facing the highest housing costs likely to feel the pinch the most.
Capping business rates may be politically popular, but it is not a silver bullet for retailers, and will also have a different impact across the country. He announced that business rate increases across England and Wales would be capped to 2 per cent next year, rather than 3.2 per cent, with a £1k discount in rates for small shops and pubs for two years and halved rates for new occupants of shops vacant for 18 months. This might be good news for retailers, but it won’t solve the woes of struggling High Streets. The big problem is declining footfall in these places as a result of an ever greater proportion of jobs locating on out of town sites. Cutting business taxes will not increase the number of people that walk past shops on Rochdale’s High Street. So while those that have lobbied government are celebrating, this announcement will do little to further their overall goal of turning High Streets around.
And, as Zach Wilcox has argued, this seemingly simple policy has a complex impact across places and on council finances, not only benefitting weaker economies more but also affecting council funding quite significantly given the increased dependence on business rates. I’d like to think that’s been considered but I’m not sure it has…
Overall then, it’s hard not to be slightly disappointed at this Autumn Statement. Yes, there were some positive announcements, but they were delivered within a framework which still fails to understand that how different policies are implemented in different places matters to outcomes.
Reducing the deficit, building more homes and boosting business are all vital to national economic growth. But unless we radically re-think how we empower places to tailor policies to their own needs, these initiatives are unlikely to have the intended impact.
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