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2012 Budget: implications for the public sector
Practical Law UK Legal Update 6-518-5401 (Approx. 5 pages)
2012 Budget: implications for the public sector
by PLC Public Sector
| Published on 21 Mar 2012 • England, Wales |
A legal update on the main March 2012 Budget announcements of interest to public sector lawyers.
Speedread
On 21 March 2012, 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, reforms of the planning regime, access for local authorities to finance from the Public Works Loans Board at a reduced rate and the roll-out of plans for localised pay for civil servants. However, most of the specific policy announcements related to the mechanics of the tax system and potentially of most significance to those working in the public sector was confirmation that the government:
- Expects to see "significant real reductions" in public spending beyond 2015 (the end of the current spending period).
- Will be examining ways that public services can be delivered within the reduced resources that will be available.
On 21 March 2012, 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 all PLC's 2012 Budget coverage, please see our 2012 Budget landing page, which will be updated shortly to include further commentary on the Budget from leading practitioners.
Specific policy announcements of interest to public sector lawyers
Announcements of interest to the public sector were made in the following areas.
Property, planning and infrastructure
- The government will be introducing substantive reforms to the planning regime. These will include publishing a National Planning Policy Framework by the end of March 2012 and introducing a number of other measures to deregulate and simplify the planning system.
- In 2012-13, the government will introduce a 20 basis points discount on loans from the Public Works Loans Board under the prudential borrowing regime for those principal local authorities providing improved information and transparency on their locally-determined long-term borrowing and associated capital spending plans.
- The government intends to take forward many of the recommendations made in Alan Cook's review of the strategic road network, including carrying out a feasibility study into new ownership and financing models for roads. For more information on the review, see Legal update, Highways Agency: A fresh start for the Strategic Road Network.
- The government will support the Manchester Earn Back Model, a new pilot for infrastructure investment.
- The government will make further funds available to support tax increment financing schemes in two cities. Details of the competition for this support will be announced later in 2012.
- The government has agreed in principle to allow Transport for London to receive a share of London's business rates.
- The government will consult on the potential role that a social housing real estate investment trust could play in supporting investment in social housing.
For more information on the 2012 Budget announcements relating to:
- Infrastructure, see Legal update, 2012 Budget: construction industry implications: Infrastructure.
- The latest position regarding government policy on council tax, see Legal update, 2012 Budget: property implications: Council tax.
Regulation and enforcement
- The government will continue its policy of reducing the burden of health and safety regulation by scrapping or improving 84% of all such legislation. Strict liability provisions will also be relaxed where an employer can show that it has done everything reasonably practicable and foreseeable to protect its employees. For more information, see Legal update, 2012 Budget: construction industry implications: Health and safety.
- Environmental legislation will be rationalised, including new contaminated land guidance to be issued in April 2012. For more information on the contaminated land regime, see Practice note, Contaminated land regime: summary.
- The government will launch sector-based reviews of regulation in April 2012 with the aim of reducing the regulatory burden on businesses.
- Sunday Trading laws will be relaxed from 22 July 2012 to 9 September 2012 to allow retailers to make the most use of the Olympics and Paralympics.
For more information on the 2012 Budget announcements relating to environmental regulation, see Legal update, 2012 Budget: environmental announcements.
Employment
- The government will take steps to allow certain civil service departments to introduce local, market facing pay.
For more information on the 2012 Budget announcements relating to employment, see Legal update, 2012 Budget: key points for employment lawyers.
Comment
Perhaps the most significant part of the budget statement for those working in the public sector is that it states the government:
- Expects to see "significant real reductions" in public spending beyond 2015 (the end of the current spending period).
- Will be examining ways that public services can be delivered with the reduced resources that will be available.
This is a clear indication that the pain of public sector spending cuts is not yet over, as the requirement to spend less will continue beyond the current spending period. The Local Government Association has responded to the news by restating calls for local authorities to be given more control at a local level over things such as the planning system and give them greater powers to raise finance themselves, for example, through tax increment financing. It is significant that both these issues are mentioned in the budget statement, but that the detail is "to follow".
It seems that whether local authorities are given the tools they have asked for to deal with the cuts to their budgets will become clearer in the coming weeks and months. Optimists will point to the government's delivery of the general power of competence (see Practice note, Localism Act 2011: the general power of competence) as evidence that the greater powers they are seeking will be delivered. Pessimists will be more likely to focus on the recent announcement that the cap on the right to buy discount will be raised to £75,000 for all authorities (see Legal update, Final plans for reform of Right to Buy published), which did not accord with the wishes of local authorities who wanted to be able to take account of local issues and then set their own caps.