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28.06.12

Government has ‘compromised’ localism and growth agendas

Birmingham City Council’s chief executive spoke out strongly at the LGA conference yesterday against the Government allowing local authorities to keep only half of business rates income.

At a session on local government finance, addressed by the Department for Communities & Local Government’s director of local government finance, Simon Ridley, among others, Birmingham’s chief executive Stephen Hughes said: “Given the [Coalition’s] key policy objective is to radically devolve to local government and give us incentives, you’d have thought therefore that they would have given us 100% of the business rates.

“They have given us 50%, and that’s taken away too much, so they’ve had to reinvent RSG [the revenue support grant settlement] to give us back some of the money they have just taken off us.

“Their own impact assessment shows that the bigger the proportion that we keep, the bigger the impact on growth – so they’ve compromised both their localisation agenda and their growth agenda in order that central government departments can  keep their grip on local government.”

Stevenage Borough Council leader Cllr Sharon Taylor, who sits on the LGA’s Finance Task Group, deplored the “punishing cuts” being inflicted on councils and said “a funding car crash is on its way”. She criticised a “CLG team that has done nothing to protect local government spending”.

She said the Government needed to cut back on the 1,300 statutory duties that local government must perform, and again highlighted how rising demand in social care and waste management, together with debt interest payments and concessionary bus pass costs, would leave many councils with virtually no cash to spend on anything else in just a few years’ time.

Ridley himself said the cuts had to be put in the wider context of all government spending, which had to be cut back due to falling output across the economy, and said the business rates plan was just one of many pro-growth measures being taken, alongside enterprise zones, the regional growth fund and so on.

Others said cities like Liverpool would suffer disproportionately under the business rates policy, but Ridley said the policy is more redistributive than its critics realise.

LGA chairman Sir Merrick Cockell has previously said the business rates proposals fall “well short” of what was hoped for.

Tell us what you think – have your say below or email us at opinion@publicsectorexecutive.com

Comments

Samantha   28/06/2012 at 12:52

Government doesn't trust councils and never really has. We're one of the most over-centralised countries in Europe yet Whitehall can't properly follow through on even this small liberalisation.

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