Observer column: 04 December 2015
Now we've had time to study the Chancellor's Spending Review, it's worth reflecting on what it might mean for Hastings and the people who live here. Are we entering calmer waters?
There was some good news. The police service budget will be protected, which hopefully will mean that cuts to front line policing can be reversed - we'll be lobbying the Police and Crime Commissioner about that. Schools and health budgets remain protected, and the Chancellor reaffirmed his commitment to bring high-speed Javelin trains to Hastings and Bexhill.
However, there are dark clouds on the horizon. Although much was made of the deferral of cuts to working tax credits, it's the move from tax credits to universal credit that will disadvantage families on lower income. While this won't be immediate, it will mean reduced payments for some. The Institute for Fiscal Studies estimates that 2.6 million families claiming tax credits will be on average £1,600 worse off than they are under the current system, with the poorest families suffering the biggest reductions. In Hastings, 8,400 families claim tax credits, around double the national percentage, and incomes in Hastings are 20% lower than the regional average, so families here will be affected disproportionately.
There wasn't much of a fair wind for councils either. Over the next four years, the remaining £18bn of council grant funding will be cut completely, to nothing. Councils will however be allowed to retain all the business rates they collect (currently they retain 50%). However, for that to work, there will have to be a system of 'tariffs' and 'top-ups', to reallocate rate income from areas with high rated businesses (such as inner London) to areas with fewer, lower-rated businesses, and to provide funding to county councils, who don't collect rates.
At the moment, we have no idea what this top-up and tariff system will look like. Nor do we know whether 100% business rate retention will be phased in as grant funding is phased out. All of which makes it very difficult to plan for the future. We don't even know exactly how much grant we'll have for the next financial year - the detail of what each council gets is not announced till late in December (usually Christmas Eve).
But we're not expecting the new system to be especially fruitful for Hastings. Local government continues to take the brunt of the government's austerity programme as more and more departments (including health, schools, defence, police, and overseas aid) are protected from further cuts. Local business rate retention won't make any difference to that - the government has not indicated that local business rate retention will mean any more money for local government overall, it will simply balance out lost grant. And there's no indication that the new system will be any more generous to councils in poorer areas such as Hastings, which have consistently received bigger cuts than elsewhere.
So we will continue to look at alternative ways of raising money. Income generation of course, and applications to other bodies for grants, some of which will have more money on offer - Arts Council England, for example, is getting more money. But that's not going to be easy. Unless something very unexpected happens, we will need to make more savings. So on top of the big cuts we've navigated so far, there are still some stormy seas ahead.