2013 Budget: implications for the public sector | Practical Law

2013 Budget: implications for the public sector | Practical Law

A legal update on the main March 2013 Budget announcements of interest to public sector lawyers.

2013 Budget: implications for the public sector

Practical Law UK Legal Update 3-525-3019 (Approx. 5 pages)

2013 Budget: implications for the public sector

by PLC Public Sector
Published on 20 Mar 2013England, Wales
A legal update on the main March 2013 Budget announcements of interest to public sector lawyers.

Speedread

On 20 March 2013, the Chancellor, George Osborne made his Budget Statement to the House of Commons.
The statement included various policy announcements of interest to public sector lawyers, for example:
  • Continuing reform of the planning regime.
  • Increased capital spending on major infrastructure projects.
  • The simplification of the right to buy regime.
  • Accelerated social care funding reform.
On 20 March 2013, the Chancellor, George Osborne made his Budget Statement to the House of Commons.
This update covers the announcements of most interest to those working in public sector organisations. For details of the PLC's 2013 Budget coverage, see the PLC 2013 Budget landing page, which will be updated to include further commentary on the 2013 Budget from leading practitioners.

Specific policy announcements of interest to public sector lawyers

Announcements of interest to those in the public sector were made in the following areas.

Planning

  • The government will continue with its reform of the planning system to ensure the regime is simple to access, supports growth and is responsive to housing need.
  • The government will be publishing significantly reduced planning guidance by the Summer, in line with Lord Matthew Taylor's recommendations (see Legal update, Consultation on planning practice guidance), to provide simplicity and clarity.
  • The government will be asking local areas to put in place bespoke pro-growth planning polices and delivery arrangements as part of new Local Growth Deals, in response to Lord Heseltine's review (see Legal update, Lord Heseltine's independent review published).
  • In order to reduce delay in bringing forward infrastructure projects, the government will be shortening the time limits for bringing a planning judicial review. Having already consulted on its proposals, see Legal update, MoJ consults on proposals to reform judicial review, the Ministry of Justice will set out its plans in the Spring. The government will also develop further measures to streamline the process for planning judicial reviews by the Summer.
  • The government will be consulting on allowing further flexibilities between use classes to support change of use from certain agriculture and retail use to increase responsiveness within the planning system.
  • By July 2013, the government will produce technical planning guidance on shale gas in order to provide clarity around planning for shale gas during the exploration phase of the industry. To ensure there is an effective planning system in place as the shale gas industry develops, the government will also produce guidance to ensure that the planning system is aligned with the licensing and regulatory regimes, in particular health and safety and environmental protection. This is likely to be published at the end of 2013.

Public procurement

  • The extension of the efficiency programme into 2015/16 will see a further centralisation of the procurement of common goods and services and reduction in the spend on information technology expected to contribute to £5 billion of further savings.
  • Following the announcement in the Autumn Statement that public procurement would be used to deter tax avoidance and evasion, the 2013 Budget confirms that updated public procurement guidance will be published and implemented on 1 April 2013 to require potential government suppliers to declare specified previous occasions of tax non-compliance.
  • The government will substantially expand the Small Business Research Initiative (SBRI) so that the value of contracts awarded through this route increases from £40 million in 2012-13 to over £100 million in 2013-14, representing 0.25 per cent of procurement budgets, and rising to over £200 million in 2014-15, representing 0.5 per cent of procurement budgets.

Infrastructure finance

The government has announced that it will increase capital spending plans by £3 billion a year from 2015-16, which will be funded through reductions in current spending. This builds on:
  • Plans to invest £5.5 billion as part of a capital package unveiled at Autumn Statement 2012 to boost investment in roads, schools and housing, see Legal update, 2012 Autumn Statement: PFI reform.
  • The provision of guarantees for projects such as the Northern Line extension to Battersea through the UK Guarantees Scheme.
  • Continued support for pension fund investment in infrastructure.

Housing

In order to give more social housing tenants the opportunity to benefit from home ownership the government wilhas announced that it will:
  • Look at ways to simplify the Right to Buy application process, see Flowchart, Right to buy flowchart.
  • Reduce the qualifying period before tenants become eligible for Right to Buy from five years to three years.
  • From 25 March 2013, raise the maximum discount cash cap in London from the current cap of £75,000 to £100,000.

Support for affordable housing

  • As part of its commitment to boost housing supply and stimulate economic growth (see Legal update, Government publishes Housing Guarantee Scheme Rules), the government will double the existing affordable homes guarantee programme, providing an additional £25 million to support a further 15,000 affordable homes starting in England by 2015.
  • To make sure that affordable housing is available to those who need it most, and following its consultation on "Pay to Stay" proposals to ensure that those social housing households on high incomes make a fairer contribution, the government will be taking steps to allow social landlords to charge market rents to tenants with income of over £60,000.

Support for social enterprises

The government will be introducing a new tax relief to encourage private investment in social enterprise, which will complement Big Society Capital (launched in 2012). The government intends to formally consult on the details of the relief by Summer 2013, which will be introduced in Finance Bill 2014.

Lord Heseltine's review

  • Lord Heseltine's review on economic growth, No Stone Unturned, which was published in October 2012, advocated increasing the devolution of economic powers from central government to LEPs for a stronger voice and role for the private sector in promoting growth (see Legal update, Heseltine review on economic growth published. The government has announced that it will be accepting the overwhelming majority of his recommendations.
  • The government will be endorsing Lord Heseltine's recommendation on the creation of a Single Local Growth Fund, devolved to the local level through new Local Growth Deals. This means that decisions on how funding should be spent is taken by those with knowledge of, and a stake in, the local area.

Spending and pay

  • As part of its commitment to fairness, from April 2013 the government has announced that it will provide those local authorities that decide to freeze or reduce council tax in 2013 with a grant.
  • The government has confirmed that the budgets of most government departments will be cut by 1% in each of the next two years. The schools and health budgets remain unchanged. Local government and police allocations that have been set out for 2013-14 will not be changed. HM Revenue and Customs will also be excluded from the funding cuts.
  • The 1% cap on public sector pay will be extended to 2015-16.

Social care funding reform

In order to protect the assets of those individuals who face the highest social care costs, the government will be introducing a £72,000 cap on reasonable care costs and will extend the means test from April 2016 (instead of 2017 as previously expected).