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The true threat of the budget is what is yet to come – and we won’t know that until October.

When the uproar over tax and VAT increases subsides over the next few days, the debate will, hopefully, turn to the most astonishing aspect of this Budget – the commitment to an enormous 25 per cent reduction in government spending over the next four years. Even more astonishing is the fact that this has been announced with no detail on where the axe will fall. We must wait until the Comprehensive Spending Review in October to find out which governmental budgets will take the hit and how.

We do know what will be protected, such as health and international aid, and we know consequently that local government will be expected to take more than its fair share of the burden.

The scale of the cuts poses a serious challenge to councils’ ability to deliver services that meet the expectations of citizens over the coming five years and beyond. Recent polling that we undertook with Populus showed that two thirds of citizens still expect public services to be the same or better in 18 months. They could be in for a shock when the implications of this tough budget really begin to be felt in their local areas. Meanwhile, growing service demands and costs in areas such as care for the elderly and children’s services show no signs of abating. A forthcoming NLGN report, Financial Horizons, will demonstrate the rising gap between income and expenditure demands faced by local government.

The ferocity of this budget creates a burning platform for our local public services. If they are to avoid frontline cuts to vital services, they must be radically re-engineered. It was disappointing that the Budget did not mention the Total Place initiative, which opened up many of the avenues for saving and efficiencies that can be utilised. CLG and the Treasury should ensure that those lessons are not lost and that the potential of Total Place is taken forward. For local government cannot do this alone. If we are “all in this together”, local authorities will need greater flexibility in how it delivers its programmes and apportions its budgets locally. This would enable it to cut out duplication and waste, and to respond better to the needs of communities.

As well as reducing costs and expenditure, local government will need to be able to raise new revenue if it is to resist this crisis, and the government’s review of local government finance will be crucial to this. Yet despite central government’s pledge to increase local flexibility over finance, in this Budget it used a centralising approach with incentives to freeze council tax. The government must clarify quickly how this incentive is to be administered and be sure that participating local authorities do not miss out. Otherwise this move is a dangerous restriction of local financial autonomy at a time when greater freedom to raise income is required.

The message on local economic enterprise was strong, though, and we look forward to the White Paper announced on incentivising local economic growth.

We also welcome the commitment to support private sector enterprises and investment in regions that are particularly reliant on the public sector. These areas in particular will face significant challenges as funding is reduced over the course of the next parliament. As part of this, it was encouraging that no further cuts to capital spending were announced and that the government committed to progressing a number of key local and regional transport projects, as well as introducing a regional growth fund to facilitate capital projects.

However, the true threat of this Budget is what’s yet to come – the 25 per cent axe that hangs menacingly over public services like the sword of Damocles. We have until October to prepare for its descent.

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