Spring Statement response and the implications for the delivery of value and efficacy for the public purse

At Local Partnerships, delivering value and efficacy for the public purse is our strapline and our purpose. Everything we do is designed to help the public sector make good decisions, invest wisely, and steward resources responsibly for communities across the UK. The Chancellor’s Spring Statement this week offers an important moment to reflect on the economic landscape in which local authorities, combined authorities, and public bodies must operate and how Local Partnerships can continue to support them.

The Spring Statement delivered by the Chancellor, Rachel Reeves, sets out a mixed picture: an economy striving for stability headwinds, a public finance environment still under strain, and deepening global uncertainty – all of which have profound implications for public sector planning and delivery.

A tightening growth outlook with long‑term consequences

The Office for Budget Responsibility (OBR) has revised its GDP growth forecast for 2026 down to 1.1%, compared with 1.4% predicted previously. Growth is expected to improve moderately in subsequent years, rising to 1.6% in 2027 and 2028, and 1.5% thereafter. For local authorities, slower growth inevitably constrains income from business rates, dampens local economic expansion, and increases reliance on strong financial planning. A stable yet subdued macroeconomic environment reinforces the public sector’s need for rigorous business cases, resilient capital strategies, and evidence‑based investment decisions – areas central to Local Partnerships’ advisory role.

Inflation improving but risks persist

Inflation has eased to 3%, down from 3.4% in December with the OBR expecting inflation to fall to 2.3% in 2026 and reach the Bank of England’s 2% target from 2027 onwards.

However, this cautiously optimistic trajectory sits alongside stark warnings: ongoing conflict in the Middle East could trigger ongoing surges in energy prices, with serious implications for inflation and household costs. This is a direct concern for local authorities managing the costs of capital projects, energy bills across estates, and the financial pressures facing vulnerable households. It also underscores the urgency of long‑term energy resilience planning and investment in local net‑zero pathways – work in which Local Partnerships continues to play a national leadership role.

Public finances improving – but no new fiscal room for councils

Borrowing is projected to decline steadily, from 4.3% this year to 1.8% by 2030 with the Chancellor now purportedly having some £23.6bn in fiscal headroom.

Yet the Spring Statement contained no major new spending announcements, in line with the government’s commitment to only one major fiscal event each year.  

For local government, this means continued financial pressure. For Local Partnerships, it strengthens the importance of our work on financial resilience, service transformation, commercial strategy, and value‑for‑money assurance. With constrained grant funding unlikely to ease soon, councils must continue to innovate – and we will continue to help them do so safely and effectively.

Labour market pressures shape local delivery

Unemployment is expected to peak at around 5.33% in 2026, before falling to 4.1% by 2030.  A softer labour market impacts everything from construction supply chains to adult social care staffing. It also affects the feasibility and timing of capital programmes. Local Partnerships has long supported public bodies in programme recovery, workforce planning, and procurement assurance – and these capabilities will become even more essential as organisations navigate volatile labour conditions.

Energy costs, resilience, and the road to net zero

Energy bills for households will fall by £150 from next month, driven by levy reallocation. While this is welcome news for residents, for public‑sector estates the challenge of long‑term energy management remains acute. Geopolitical instability, dependency on imports, and climate‑driven risk factors all point to one central conclusion:local energy resilience must be strengthened. Local Partnerships continues to support councils and combined authorities on heat network development, decarbonisation planning, renewable generation options, and investment‑grade net‑zero strategies. The Spring Statement only heightens the urgency of this work.

Demographic shifts and local planning

The UK’s adult population is now projected to grow more slowly than previously forecast, driven by lower net inward migration – approximately 50,000 fewer people per year than earlier predictions.

For local authorities, this affects housing strategies, school place planning, health and care demand modelling, and long‑term economic potential. Local Partnerships’ analytical and strategic planning support will be vital as councils recalibrate demographic assumptions and adjust long‑term infrastructure plans accordingly.

Conclusion: Stability, stewardship, and strategic action

The Spring Statement does not overhaul fiscal policy, nor does it materially alter the funding realities facing public bodies. Instead, it paints a clearer picture of an environment where stability must be actively created, not passively awaited. The pressures from slower growth, lingering inflation risks, a fragile labour market, and global unpredictability all underscore the need for disciplined planning, resilient investments, and rigorous oversight of public spending.

This is the environment in which Local Partnerships thrives. Our mission – to ensure value and efficacy for the public purse – has never been more relevant. We will continue to support local government, central and devolved government and the wider public sector, to navigate uncertainty, seize opportunities, and deliver confidently for the communities they serve.

As CEO, I am proud of the role we play and remain committed to ensuring our expertise, insight, and collaborative approach help the public sector deliver the best possible outcomes – today, and throughout the challenging years ahead.

Please get in contact with me if you’d like to discuss anything we might be able to support you with, on adele.gritten@localpartnerships.gov.uk.