Joanne Pitt, CIPFA Senior Policy Manager
Looking at the Spring Statement through a local government lens, it’s less about what was announced and more about what was left unsaid. We all know that no new money is on the table — something the Chancellors made clear. Instead, the focus was on navigating an unpredictable world where public spending must prioritise other areas, such as defence.
For local authority Chief Financial Officers (CFOs) tuning in, one particular concern probably hit home: the rising cost of borrowing. This is a daily struggle for councils trying to balance the books while delivering vital services for their communities amid rising demand. According to government records, total borrowing (excluding loans from local government) continued to rise from June 2024 to December 2024. If local authorities are to play a meaningful role in Labour’s mission for regeneration and growth, they’ll need access to investment. But with borrowing costs climbing, making the business case for new projects is becoming harder — and the risks are mounting.
The investment challenge
CIPFA’s Chief Economist Jeffrey Matsu made a similar observation in Public Finance urging Rachel Reeves to use the upcoming Spending Review in June to clearly prioritise investment projects that drive regional growth, improve productivity, and create good jobs -directly supporting Labour’s growth mission.
If Local authorities are to be at the heart of this regeneration drive, they need more than ambition — they need the confidence to invest and the financial stability to plan long-term.
Planning reform: the promised land?
According to Reeves, planning reform is a key pillar of the government’s growth strategy. The Office for Budget Responsibility (OBR) estimates that government policies will boost GDP by 0.2% by 2029/30.
Cutting red tape will no doubt appeal to some, but within the sector, there’s broad recognition that legislation is only one piece of the puzzle. Without the right capacity, skills, and land in place, major regeneration schemes will struggle to get off the ground.
The OBR’s stark warning
Looking beyond the headlines, the OBR’s background analysis does not shy away from the elephant in the room: there’s no clear solution to address local government spending pressures beyond 2025/26.
The cost of Exceptional Financial Support (EFS) is expected to hit £1.3bn per year in 2025/26. But beyond that? The OBR states: “Government has not yet set out how local authority spending pressures will be managed after 2025-26 in the next Spending Review period.”
This lack of a forward plan is arguably the biggest issue facing the sector. But as is so often the case, the urgent takes priority over the important. CFOs are dealing with immediate crises — budget pressures, service delivery challenges, and financial instability — which means the long-term question remains frustratingly unanswered.
The road ahead: defining the future of local government
We know where we are now — and for many councils, it’s not a comfortable place to be. But what’s the destination? Do we accept a reduced scope of services? Do we fully embrace place-based delivery? Or do we aim to maintain current service levels but acknowledge that funding mechanisms must change, with higher contributions from the public?
Until there is a clear vision and consensus on the sector’s direction, funding stability will remain an enigma.
For finance professionals navigating tough budget discussions, reorganisation, and devolution, there wasn’t much in this Spring Statement to lift spirits. But if there’s one thing local government finance teams do well, it’s looking ahead.
Rather than dwelling on what wasn’t in the Spring Statement, all eyes now turn to the Spending Review in June and the Autumn Budget. Multiyear settlements have been promised — maybe not a reason to celebrate, but in these times, even small wins matter.
Here’s hoping that the next fiscal announcements bring not just funding, but a clear, stable path forward. Local government deserves nothing less.