Latest Public Sector News

23.07.18

‘Annual scorecard’ for council finance outlines funding options post-2020

Reformed business rates, more flexible council taxation, and exploring new ways of allowing councils to access funds are amongst future plans for the LGiU’s annual scorecard.

Released today, the think tank launched the ‘Local Finance Scorecard’ to kickstart the wider debate on pathways for local government finance and funding post-2020.

The LGiU outlined five key areas which will be on local council’s agenda in the coming year: re-evaluating the devolution of money and responsibility from Whitehall to local government; reforming business rates for the 21st century, including allowing councils to set their own business rates; and making council tax “fit for the future” through repurposing the process with Land Value Tax.

In addition, the think tank highlighted funding sources such as municipal bonds, loosening borrowing rules for councils, and multi-year budgets as part of its fourth key area for council finance structure in the upcoming years.

Other local taxation areas such as tourism tax, local VAT, and local income tax will be prominent areas of discussion for the LGiU following the establishment of the Local Finance Taskforce — the LGiU’s financial watchdog — in February.

The scorecard sees the launch of the LGiU’s Local Finance Taskforce consultation on funding options post-2020 as the think tank calls for the debate to be broadened across government and amongst key stakeholders.

Jonathan Carr-West, its chief executive, said: “Confidence in the local government finance system is low. Every year we survey council leaders, chief executives, cabinet members for finance and chief finance officers. In 2018, eight out of 10 of them told us that the local government finance system in its current form was unsustainable.

“Important changes are happening. Business rate retention and the Fairer Funding Review are significant steps towards reforming local government finance; but we believe that to achieve a sustainable system we need a much broader and more radical conversation post 2020.”

Over the summer and autumn, the Local Finance Taskforce will be engaging with LGiU’s 200 member councils and other stakeholders through regional roundtables and events to refine and deepen this thinking, with a final report and set of recommendations produced ahead of the Autumn Budget.

The news of the scorecard comes after CIPFA’s suggestion to create an index aimed at measuring councils’ financial viability last week.

The move was criticised by bosses from the County Councils Network and the Association of County Chief Executives, who warned that well-intended proposals from CIPFA to create the ‘traffic-light’ ranking of local government financial health would be used as a “blunt instrument” instead.

Local government’s wrangle with finances has been a prevalent feature in the news for several months. In June, reports surfaced that councils had made at least 486 agreements to share services with other councils in the past seven years to cut costs in times of austerity.

Earlier this month, communities secretary James Brokenshire failed to make firm commitments to lobby the chancellor for more money in the upcoming Spending Review.

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Image credit: ShaunWilkinson, iStock Images

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