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15.01.16

Cuts to central grant and NHB will hurt house-building councils – DCN

The cumulative impact of government grant and New Homes Bonus (NHB) reductions for local authorities that have been “brave enough” to promote housebuilding will be particularly acute, the District Councils’ Network (DCN) said.

In its response to the local government finance settlement 2016-17 consultation, seen by PSE, the DCN said the overall financial impact of the four-year deal can only be put into context when the New Homes Bonus consultation comes out, and business rates are reformed.

But it found that the proposed funding figures for 2018-19, or the third year, already indicate “significant reductions” for district councils.

“Although there is a wide range of impacts across the district family, DCN would urge the government to consider transitional measures to dampen the impact,” the response said.

Reducing the NHB, a reform for which consultation is currently underway, would also represent a “surprising switch in policy emphasis” that would see the councils most focused on housebuilding be most impacted by cuts, the body said. This is because districts promoting housing growth would have already factored in the bonus cash into their financial planning.

As well as disincentivising some councils to promote housing, the bonus cuts could also fail to reward authorities for plots yet to be built but already consented to, the DCN said – echoing some of what the County Councils Network had previously claimed.

An alternative solution to the latter would be to hand districts the power to acquire part (or all) of consented sites that have not been developed or progressed for years. Councils would get smaller and local builders to work on these homes at a faster pace.

“If some new levers were possible, local authorities would still have an incentive to help accelerate the pace of housing delivery in a way that will not happen if developers continue to stockpile consents,” the response said.

“LGA figures show that there are approaching 500,000 of such consents in the country!”

Districts also argued that, while there is a funding gap in the social care sector, diverting £800m from the NHB national funding for this purpose is a concerning solution, and could prove counterproductive to Whitehall’s housing ambitions.

Ultimately, it argued, the government needs to shift its focus from major reforms to the planning system back to delivering already consented schemes in order to bolster housebuilding in the short and medium term.

Social care and public health prevention

Discussing the new social care precept, the DCN made a case for expanding the 2% tax raise to district councils.

“We make this request because the proposal in the provisional finance settlement has an anomaly - if you are a unitary council you can raise the additional 2% on your total precept amount, whereas if you are in a two-tier area the county council can only raise the additional amount on its element of the precept.

“Providing that the correct ring-fence is in operation (i.e. for prevention services), there should be no reason why the additional levy cannot be made on the district element of the bill also (if the district council wishes to do so) so that there is a level playing field.”

If districts were to have the 2% levy, it would “of course” be used towards prevention initiatives, which the network deemed “far more effective” than responsive care measures – making it surprising that the government did not require authorities to have an ‘improvement, integration and prevention plan’ as part of the levy deal.

In the Spending Review, the chancellor made clear that all local areas will have to design plans for integration between the care sector and the NHS by 2017, to be implemented by 2020 – but did not specify whether this should focus on prevention or responsiveness.

Also on prevention, the DCN reiterated its argument that districts are the “sleeping giants” of public health, calling on the government to oblige Health and Wellbeing Boards to include district council members with influence over public health spending.

Districts also requested the power to set up a new taskforce to develop a model for how prevention services could be embedded in an integrated health and social care service at local level in order to generate further efficiencies.

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