10% Council Spending Cuts

As part of the 2013 spending review, George Osborne confirmed that a further 10% cut to Local Authority budgets was to take place in the year 2015/16. This is to come out of the money administered through the Department for Communities and Local Government.  The 10% cut is in addition to a 33% cut in central government funding earmarked for councils in the current spending round period 2011/12-2014/15. In total then a 43% cut in Local Authority budgets between 2011 and 2015.

This new round of cuts will have an effect on Local Authorities ability to efficiently progress planning applications with potential knock-on effects being a greater number of applications failing to be determined within the specified timeframe. The commencement of development therefore has the potential to be delayed as Local Authorities struggle to cope with increased demand with diminished resources.

Funding for 180 Free Schools

George Osborne announced funding for what he called “an unprecedented increase in the number of free schools”. Under amendments to the GPDO 1995 that came into force last month, free schools benefit from permitted development rights for up to one academic year. The provision can only be used once for any particular site.

The government are committed to the free schools idea and the extra funding combined with the revised GPDO will mean greater pressure on potential development sites to be turned into free schools.

£2bn a year of Whitehall Funding Devolved to LEPs

From 2015, private-public local enterprise partnerships (LEPs) will be able to access £2billion a year of central government money adding up to a total of £10billion over the next parliament. This is short of the £12billion called for by Lord Heseltine in his report published last October ‘No Stone Unturned’.

The funding is in-line with government efforts to stimulate growth in the economy through capital spending. It remains to be seen however, what the impact this capital spending is going to have on stimulating the economy.

Infrastructure Spending

George Osborne announced yesterday that the capital budget of the Department for Transport (DfT) will rise to £9.5 billion every year to 2020. For 2013-15m, it is £7.5 billion a year. The DfT will be expected to make 9% of savings on its day-to-day spending.

The government are increasing capital spending on infrastructure as a method of driving an economic recovery. The key project for London is Cross Rail 2, which if given the green light after the feasibility study will present development opportunities along its route in the same way as Cross Rail 1.

Conclusion

The government are very keen to expand capital spending as a way of driving an economic recovery. The majority of this spending is focused on transport infrastructure.

At the same time, the government are trying to make efficiency savings within central government departments whilst also cutting funding for Local Authorities. It is a delicate balance to strike, as too much of a cut to Local Authority resources will have the counterintuitive effect of delaying development due to Local Authorities not being able to keep with the increasing demands made on them to make planning decisions as the economy starts to recover.