Rural firms are set to lose out on hundreds of millions under revised funding plans unveiled in the recent Budget, the Country Land and Business Association has warned.

The CLA, which represents 28,000 rural businesses and farmers, has criticised the government for removing support aimed at levelling up the rural economy.

The group found that spending plans under the UK Shared Prosperity Fund (UKSPF) will lead to a shortfall of £315 million for rural businesses over a seven-year period.

The figure represents the discrepancy in funding assigned to tackling regional economic disparities through the EU’s Structural and Investment Funds (ESIF), versus what will be received under the UKSPF to bolster rural productivity.

But the government’s new plans signal a marked shift from previous EU investment models, where rural areas benefitted from a ringfenced fund every year. 

Closer inspection of the 2021/2022 Budget shows that there will be no dedicated funding in the UKSPF for rural businesses, as the ESIF rural fund had already been allocated for 2020/2021.

The government is seeking another £16bn in spending cuts of current or “resource” spending by 2020, according to an IFS analysis of its plans.

Separately from that, the Treasury is seeking £12bn in cuts to welfare spending, from tax credits managed by HMRC and other benefits administered by the Department for Work and Pensions. Capital spending on big-ticket investments such as road and rail improvements is protected.

A number of departments, including health, international development and defence, as well as part of the schools budget are also ringfenced. This means other departments are facing cuts of up to 40%, which are likely to lead to large reductions in Whitehall staff numbers. [this is interesting as Tony Travers pointed out at the RSN conference nearly all the significant staffing reductions in the public sector so far have been focused at the local level and the numbers employed in Whitehall have currently hardly reduced at all]

Cuts agreed

Treasury

Osborne’s own department oversees HMRC, which is responsible for tax credit spending. The department has already agreed to resource spending cuts of 30% but is still working out how to reduce the impact of a plan for £4bn of cuts to tax credits that was rejected by the House of Lords.

Communities and Local Government

DCLG has agreed to cuts of about 30% over the next four years. This is separate to funding for local government, and is likely to involve the closure of what the Treasury refers to as “low-value programmes”.

Transport

Cuts of 30% have been agreed to the DfT’s current budget over the next four years. It could affect sustainable transport and funding for buses, walking and cycling programmes. Capital spending is protected so big investments in road and rail will go ahead as planned.

Environment, Food and Rural Affairs

Cuts of 30% have been agreed, with the department expected to scale back the extent of its footprint while trying to prioritise spending on flood and disease prevention.

…they (“unprotected” Government Departments) have been instructed by the chancellor to “model” the impact on the services they provide of finding savings of either 25% or 40% by 2019-20 – or £20bn per annum of cuts in aggregate.

This is the stuff of public-service reinvention, not efficiency. Which is not to say that better buying of paper clips won’t still yield something.

But the last Parliament had a massive onslaught on waste, bad buying, duplication of services and under-use of assets.

The low hanging fruit of improved productivity has already been picked.

Now ministers have to be bold and creative in doing more for less, if they are not simply going to kill the provision of some services we take for granted.

The Treasury’s document, published today, talks a fashionable talk about how digital delivery and big data can work cost-saving miracles.

Well, maybe. But the brainy chaps who work for George Osborne are probably a bit like me, in that they understand the theory of all this without having a clue how to put it into practice.

Notwithstanding the minister acknowledging there is further to go in addressing the inequality in funding between rural and urban authorities – this article makes me pessimistic about whoever wins the next election. It demonstrates how independent financial analysis indicates that we in Local Government to quote Private Fraser may well be “doomed” with the state set to become smaller in relative terms than at anytime in the last 80 years. By my reckoning that’s in the middle of the great crash of the 1930s. About time a new Keynes (in the sense of someone to redefine the economic dialectic) for the 21^st century arose from the ashes – but that’s just my view. This article tells us….

Britain faces a spending squeeze larger than any advanced economy over the next five years, according to the Institute for Fiscal Studies, which warned that tax hikes were likely if the Government was to meet its target of balancing the books.

Under current plans, the UK’s fiscal consolidation over the next parliament will be largest out of 32 advanced economies, including austerity-hit Greece and Portugal.

The think-tank’s analysis also showed that spending plans set out by Labour would leave Britain’s already massive debt pile 10 percentage points larger than under a Conservative government.

George Osborne has claimed that no “major tax rises” are needed to meet its target of achieving an overall surplus of £23bn by 2020.

The IFS said 98pc of the remaining fiscal consolidation was currently planned to come from spending cuts, which the government’s official forecaster has said will take the size of the state to its lowest share of gross domestic product (GDP) in 80 years.

The government only has a “limited understanding” of the impact of budget cuts on local authorities in England, a public spending watchdog says.

Some councils were showing “clear signs of financial stress”, but many had “coped well” with cuts, said the National Audit Office. The Local Government Association has warned services would “buckle under the strain” of more cuts. Most local authority funding comes from central government, with about a quarter raised through council tax. By 2016, government funding will have dropped in real terms by 37% since 2010, the National Audit Office said. Auditors are “increasingly concerned” about councils’ ability to make more savings, the report said, with over half of authorities responsible for education and social care not well placed to provide the services they hope to over the next three to five years.

The report said there were “significant differences” in the size of budget cuts faced by different council areas, with those that depend most on government grants the hardest hit.

It also said the Department for Communities and Local Government did not monitor the impact of spending cuts “in a co-ordinated way”, instead relying on other departments for alerts.

As a result, it said, the government risked finding out about serious problems “only after they have occurred”.

In a joint open letter to communities secretary Eric Pickles, published on Wednesday ahead of the announcement of the next tranche of local government funding, the leaders of Liverpool, Newcastle, Birmingham, Nottingham, Sheffield, Leeds and Manchester local authorities say the scale of anticipated cuts imposed by ministers mean “vital services” will no longer be able to be protected.

A key excerpt says “Combined with unprecedented spending pressures, particularly in the social care services, the cuts we now anticipate will leave us unable to provide anything like the range or quality of public services we believe our citizens have a right to expect.”

The seven signatories are all leaders of Labour-controlled councils – the eighth member of the “core city” group, Bristol, is run by an independent elected mayor, George Ferguson. The core cities group represents the eight most economically important cities outside London.

The counties are also getting in on the act : Conservative politicians have also publicly complained about the level of cuts. The Tory leader of Kent county council, Paul Carter, warned last week his organisation was “running on empty” while the Conservative leader of the Local Government Association, Merrick Cockell, has called the cuts “unsustainable”.

Last week, one of the signatories of the letter, Liverpool council leader Joe Anderson, predicted the scale of the cuts would spark riots in the streets. Another signatory, the leader of Birmingham city council, Sir Albert Bore said in October that the council expects to see almost half its £1.2bn budget lost to cuts by 2017, prompting him to declare “the end of local government as we know it.”

Councils fear that trajectory of government spending cuts means they will have to “decommission” entire services considered to be non-core, including libraries, arts, leisure facilities, youth services and after-school clubs, while core services so far largely protected from cuts, such as care of older people and child protection, will start to feel the pinch.

“What does it need the extra money for? Five words: more staff on higher salaries.”

There is a real problem here, whether you support Europe or not –  and I still think in this country we have limited and confused perceptions of what our EU membership is about. Its benefits are often based on poor or biased reporting of key issues – the problem is that against the deep public sector cuts (which I would argue are having a disproportionate impact on rural places) the demand for this level of budget increase has a Marie Antoinette style ring to it.

In addition to the impact this article purports it will have on our spending cuts it also threatens to wipe out the engagement and enthusiasm many more positive Euro watchers than this individual have for our membership of the European Union. Or have I got it all wrong?

On Wednesday night, the 10 o’clock news ran a feature comparing the impact of budget cuts on East Dorset and a London Borough.

The first thing to note is that representatives from both councils didn’t get drawn into a “beggar my neighbour” discussion justifying their own position whilst criticising the other and I thought that was a dignified way to tackle things.

The second thing to note is that I never previously thought that the inequities of the spending formulae for local government – the staple fare of the Rural Services Network – would make popular news in this way and the thing was really well presented.

It set out in a nutshell what we know – many rural authorities rely heavily on council tax rather than government grants to fund their activities. In this scenario with the current cuts being mainly linked to government expenditure those authorities with significant government grants are being hit very heavily and those with a greater reliance on their own “tax base” are proportionately slightly less affected.

Let’s hope viewers didn’t assume it was all “milk and honey” in rural England compared to the tough old world of “the smoke”. What it does emphasise is that rural and urban authorities do have different contexts and that the current way their funding works which treats them as broadly the same apart from their levels of deprivation doesn’t work very well.

It also causes me to reflect on the opportunities linked to the proposals in the Localism Bill about giving authorities the opportunity to control their destinies more through more flexibility over managing their own tax base.