What the Summer Budget means for you

  • The introduction of a new national Living Wage was a stand-out announcement from Chancellor George Osborne’s Summer Budget
  • Other key announcements included the abolition of student maintenance grants and an extra £8 billion a year for the NHS
  • There will be further devolution of powers to local councils, who will have to cope with major funding cuts

The announcement of a new national Living Wage of £9 an hour by 2020 was one of the most eye-catching announcements of the first Conservative-only budget in nearly two decades.

The new Living Wage will affect organisations and businesses across the country, including the public and voluntary sectors. Councils in England and Wales warn it could cost them an extra £1bn a year by 2020, and would mean social care contracts would need to be renegotiated adding an estimated £330m to bills.

But it was by no means the only significant announcement made by Chancellor George Osborne.

Andrew Jepp, ‎Director of Public Sector at Zurich Municipal takes a look at some of these changes, and what they mean for the public and charity sectors.

This Budget presents both opportunities and challenges for the UK. The Chancellor was in a buoyant mood, and rightly so. The fundamentals of the economy are stronger than they were some years ago, allowing him to announce the introduction of the national Living Wage.

Local government

However, the Budget will continue to disappoint councils. While local government was spared further cuts, it has been dealt little reprieve, especially as the Chancellor announced another £4.5 billion in cuts only three weeks ago.

Whilst this announcement knocked schools, health and transport the hardest, the Summer Budget will have a broad-ranging effect across all sectors of local government, not least with the impact of welfare cuts on already strained local services.

Phasing in changes

The Government plans to legislate for many of these changes over the next few months with the cuts taking effect from next year. For example, the four-year freeze in Local Housing Allowances will run from 2016/17 to 2019/20.

There is no single solution for local government that will address this challenge, and a range of measures will be required. What is universal, however, is the need for innovative and transformational change to the delivery of public services.

Local councils should see this as an opportunity for reform, with the ultimate goal being the delivery of public service to the highest standard.

Risk-based approach

With this is mind, it is important that local authorities do not take a short-term view. Instead, council chiefs should consider a risk-based approach to transformation.

To be clear, this is not about avoiding risk, but about taking calculated risks having fully assessed the exposures. This will become especially important in anticipating where the risk sits in increasingly complex local government structures, such as combined authorities and partnerships.

The comments on devolution, in which the Chancellor announced that an ever greater number of services will now be handed to a consortium of 10 councils in Greater Manchester, and a push for further devolution of services to Sheffield, Liverpool and West Yorkshire, will also be welcomed.

This is a positive step, and a promising development for local government seeking greater autonomy over local services.

However, with each new power comes greater risk, and councils must ensure that they are well-equipped to manage this challenge going forward.