The LGA's Budget 2015 Submission - February 2015 www.local.gov.uk The LGA's Budget 2015 Submission
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The LGA’s
Budget 2015
Submission
February 2015
www.local.gov.uk
The LGA’s Budget 2015 Submission 1Contents
1. Introduction and summary 4
2. Adult social care 7
3. Welfare reform 10
4. Education and children’s social care 12
5. Growth, skills and infrastructure 15
6. Local government finance 17
The LGA’s Budget 2015 Submission 31. Introduction and summary
We are calling on the Government to: However, reductions in funding are only part
of the challenge local government has faced
• Protect public services in England and will continue to face over the course of
and ensure adequate funding so that the rest of this decade. Councils are subject
councils can provide these services to particular pressures on demand-led
locally. In particular, we call for the services which are affected by various factors
Government to protect adult social care such as demographic change. In addition,
funding, and inject a further £1 billion due to the government’s incentive-based
per annum into roads maintenance. funding system reforms, such as welfare
• Make place based finance, underpinned reform and business rate retention, local
by multi-year settlements for all local authorities now face larger uncertainty and
public services, the default method of risk when it comes to own-generated income.
service funding and delivery, empowering
Councils face uncertainty not only over
local partners to work towards shared
whether new burdens, such as the costs
outcomes.
of implementing the Care Act, will be fully
• Engage in true, meaningful devolution of funded, but the adequacy of funding for
decision-making powers and funding to the rising cost of existing burdens outside
the local level. The devolution settlement councils’ control, such as the concessionary
across the UK has to be fair. fares scheme and increasing referrals to
Local government will have dealt with a children’s services. So far, councils have been
40 per cent real terms reduction in core successful in this balancing game. They have
government grant funding by April 2016. been able to prioritise and protect spending
Local government has received a greater on frontline services for the vulnerable, such as
reduction in funding than the rest of the social care. A variety of indicators confirm the
public sector and therefore should not be achievements of local government to date:
subject to further cuts in this year’s Budget. • In the majority of cases, local residents are
Any further reductions to public spending not yet feeling a reduction in the quality of
need to be driven by public service reform. local services.1
The Office for Budget Responsibility (OBR) • Local residents trust local government
predicts that government grant funding to more than central government to make
councils in England will fall by another £8 decisions about local public services2.
billion over the course of the next Parliament.
• Councils continue to choose to keep
This is an optimistic number given that
council tax low. From 2010/11 to 2014/15,
the OBR assumes the NHS budget will
council tax has actually reduced by 5.8 per
not continue to be protected. Dealing with
cent in real terms.
spending reductions during this Parliament
has raised the need for a future government 1 BBC, October 2013. ‘Public service cuts: did we notice?’
to look at the impact of the funding 2 See the quarterly LGA reputation tracker, page 12, table 8.
http://www.local.gov.uk/documents/10180/11719/October+
mechanism on local authorities. 2014+Resident+Satisfaction+Polling+-+Final+Report.pdf/
dd57f664-443f-4bf7-9455-4506614bee6c
4 The LGA’s Budget 2015 SubmissionThe evidence is clear. While local Surveys of public opinion continually show
government has so far been successful that local residents trust local government
in counteracting the impact of cuts, some more than central government when it comes
councils are edging closer to not being able to their local area. Yet local decisions, such
to provide all the public services that local as how to train people in the skills needed by
residents have come to rely on and expect. local businesses, are dictated by government.
For example, services such as economic Greater power must be devolved to local
planning and development have already communities through their democratically
seen large reductions in funding. In our call elected local representatives so they can
for evidence in late 2013, 60 per cent of decide how their services should be run.
respondent councils said that efficiencies Devolution must not stop at Westminster,
alone would not be enough to meet the Holyrood or Cardiff, but continue outwards to
budget challenge in 2015/16. In response the people in the cities, towns, and counties
councils have increasingly mobilised and of England, Scotland and Wales.
joined efforts to stamp out inefficiencies.
In this submission, we also address a number
The LGA’s shared services map shows of proposals in more detail. We call on the
that as at March 2014 at least 337 councils government to:
were engaged in 383 shared service
1. Fully fund the cost implications of
arrangements. This sort of collaboration is
the Care Act and the Supreme Court
increasingly giving rise to more complex
judgement on Deprivation of Liberty
models of decision-making, such as
Safeguards (DoLS).
combined authorities.
2. Fully fund council tax support,
Central government should remove the
acknowledging that the scheme to date
barriers to innovation in places and
has taken millions of pounds out of
encourage local service delivery bodies, such
funding for council services, provide
as academies, job centres, the skills funding
longer term certainty for local welfare
agency and others to cooperate with councils
assistance funding at a level that is
at a local level to truly reconfigure services to
responsive to demand, and maintain
fit local circumstances.
funding for Discretionary Housing
This will also unlock cross-government Payments.
savings. An important element of this is
3. Reverse the 48 per cent cut in the Early
multi-year settlements for all budgets for
Intervention Grant to councils and
services delivered locally – this should
recognise that this is a false economy that
include services currently provided by central
will increase costs elsewhere in the public
government, and capital allocations for
sector.
schools.
The LGA’s Budget 2015 Submission 54. Implement funding and policy
These pressures have a much wider
commitments in the Growth Deals
impact than the institutions of local
swiftly without imposing bureaucratic
government. The services used by
hurdles.
individuals and families are at risk,
5. Work with local government to improve and this is recognised by a wide range
the business rates retention system, of charities and other groups which
including managing appeals and support the LGA’s proposals. The quotes
avoidance risk, and introducing a larger throughout this submission demonstrate
locally retained share of business rate the support from groups including:
revenue while also equalising for need.
• Action for Children
6. Implement a range of financial
• Age UK
freedoms, flexibilities and reforms to
improve the financial sustainability • Barnardo’s
of local authorities such as lifting the • The Campaign for Better Transport
housing borrowing cap and greater local
control over council tax, fees and charges. • The Care and Support Alliance
• Centrepoint
• Chartered Institute of Public Finance
and Accounting
• The Children’s Society
• Federation of Small Businesses
• National Institute of Economic and
Social Research
• NHS Confederation
6 The LGA’s Budget 2015 Submission2. Adult social care
We call on the Government to: four years and divert as much as £900 million
from budgets in 2013/14 alone to protect
• Protect funding for social care services adult social care – this transfer is set to rise
in a similar way to how health spending by £1.1 billion by 2015/16 should councils
is being protected. Protecting health wish to continue with the protection.
expenditure at a cost to social care
budgets is a false economy that cannot be Research by the National Audit Office
sustained. Continued investment in local confirms that councils have prioritised social
social care activity is essential for avoiding care spending and protected it in cash
another winter pressures crisis. terms.3
• Fully fund the cost implications of Reductions in funding for social care have
the Care Act and the Supreme Court increased the pressure and financial burden
judgement on Deprivation of Liberty on the NHS. If social care is not put on a
Safeguards (DoLS). Local government sustainable footing the situation will only
cannot have confidence that the get worse and this will affect NHS services.
government will fund the costs of unknown Investment of extra money in the NHS while
Care Act pressures if it does not fund the forcing councils to cut their social care
known costs of DoLS burdens. budgets is simply a false economy and not a
• Fully integrate the funding for the solution to this ever-growing problem.
commissioning of care and health
The recent winter pressure crisis is a prime
as a step towards a single point of
example of this. Councils have worked
commissioning, supported by long-term
incredibly hard to reduce the proportion of
funding settlements, a larger Better Care
delayed transfers of care attributable to social
Fund (BCF) and a transformation fund to
care to 25 per cent, and yet they are receiving
ease the initial impact of the changes.
£37 million, only around 5 per cent of the total
The LGA has long warned that the health resilience funding.
and social care system is chronically
The recent Supreme Court judgement on
underfunded.
DoLS is placing additional on-going funding
It is social care services that support elderly cost pressures on the system, a minimum
and vulnerable people to maintain their of almost £100 million in 2015/16, recurring
independence, live in their own community thereafter.
and stay out of hospital longer which is why
There are also risks of inadequate funding for
investing in social care plays a crucial part
the implementation of the Care Act reforms,
in alleviating the pressures on the health
especially additional assessments, services
service.
for carers and the introduction of the national
In response to cuts to local government minimum eligibility threshold.
funding, adult social care departments have
had to find savings of £3.5 billion over the last
3 National Audit Office. Financial Sustainability of Local
Authorities 2014
The LGA’s Budget 2015 Submission 7The government has just released an Impact
Assessment for the main Dilnot reforms which “Age UK exists to promote the best
shows that it has revised the estimate of costs interests of older people, especially the
downward by £650 million over the lifetime of most disadvantaged and vulnerable. We
the next Parliament alone. It must ensure that share the LGA’s analysis of the problems
the Impact Assessment is fair, accurate and affecting social care and the need for
takes into account local experience. substantially more investment in a fully
joined up health and care system. At
Analysis to date suggests that the BCF is the moment, we know that approaching
predicted to lead to a net financial benefit a million older people in England with a
to local government of up to £440 million social care need are not receiving any
in comparison to 2014/15. The benefits are support – not from councils nor from
non-financial too – increased cooperation and families and friends. We believe this is
new ways of working will potentially improve unacceptable in a civilised society. It also
service quality. makes no economic sense since social
care is relatively inexpensive and the lack
The original intentions of the BCF – a
of it undermines older people’s resilience,
mechanism to take forward integration at
making it more likely they will succumb
scale and pace and promote locally-led
to illness and need expensive hospital
integrated care – remain sound. But they have
treatment. In addition, for those older
been greatly diluted by an overly-centralised
people in need who are lucky enough
process. The BCF can be a model for future
to be receiving social care the quality is
service planning but only if it is based on the
patchy and often poor.
original intentions of the fund.
“Reform is therefore overdue. In this
This means a bigger BCF over a longer period
respect we applaud the Government’s
of time with maximum local flexibility and a
new Care Act, which offers a framework
transformation fund of new money to meet the
for the kind of social care system older
costs of moving to a new service model of
people are entitled to expect, but there
preventative, personalised, coordinated care
is no chance of its good intentions being
and support closer to home.
realised unless the social care funding
gap is filled. Reform and funding must go
hand in hand.”
Age UK, February 2015
8 The LGA’s Budget 2015 Submission“The Care and Support Alliance supports “Without adequate funding for care, the
the Local Government Association NHS will continue to be forced to pick
Budget calls in relation to social care. We up the pieces from a social care system
particularly welcome the focus on the link that is not resourced to meet demands,
between spending on health and social which will be increasingly unable to keep
care and the need to protect both. people out of hospitals. This would be a
disaster for the health service and those
The impact of chronic underfunding left languishing in hospital beds instead
of social care on the NHS, and of being cared for in their own homes and
particularly A&E pressures, has been communities.
widely recognised. In January 2015, the
Government put an additional £25 million Our frontline staff are increasingly
into 65 areas with the biggest problems of concerned about the impact this is
delayed discharges. This was a welcome having on vulnerable people in our
move, but the final Budget before the care. Government must invest money in
2015 General Election, would provide protecting a system which will be there to
the opportunity to make a reliable and look after people now and in the future,
consistent investment in social care to and must commit to a long-term strategy
avoid similar problems occurring in future to ensure people get the care they need.
years. The system is in crisis now. We cannot
wait any longer for it to be fixed.”
The LGA analysis of the reduction in
social care funding makes it clear why Joint statement from the LGA, NHS
the CSA hears so many stories of people Confederation, British Medical
failing to be supported to wash, dress, Association, Royal College of Nursing,
leave the house and communicate with and Care and Support Alliance, January
those around them. This results in people 2015
withdrawing from society, becoming reliant
on friends and family to provide care and
support, often driving those relationships
to crisis point. The only way to address
this is sustained and consistent
investment enabling local authorities to
plan effectively to meet their duties in a
sustainable way. Without this the social
care system will remain in crisis.”
Richard Hawkes, Chair of the Care
and Support Alliance and Chief
Executive of Scope, February 2015
The LGA’s Budget 2015 Submission 93. Welfare reform
We call on the Government to: As a result many councils will struggle to
protect their local welfare scheme from this
• Fully fund council tax support, cut from April resulting in an inevitable scaling
acknowledging that the scheme to date has back of support. The additional funding is
taken millions of pounds out of funding for also unlikely to have a meaningful impact
council services, and has increased the in alleviating the huge pressures on adult
cost of living for some of the poorest. social care. Longer term certainty is required
• Provide longer term certainty for local for local welfare assistance funding, which
welfare assistance funding at a level that should be set at a level that is responsive to
is responsive to demand. demand and the associated support provided
by local authorities.
• Maintain funding for Discretionary
Housing Payments (DHP) at the 2014/15 The Discretionary Housing Payment fund
rate in line with the ongoing demand that is allocated to each local authority to help
it is designed to mitigate. people in their area with housing costs and
• Ensure that any new costs or additional assistance associated with the
administrative burdens from the welfare impacts of the welfare reforms. These include
reforms that are passed from central to the benefit cap, spare room subsidy and
local government are matched by the changes to housing benefit entitlements.
appropriate funding in line with the ‘new Demand for DHP is high with 52 per cent
burdens doctrine’. spent by English authorities at the six month
The gulf between the money the government period of 2014/155 and many councils
gives councils to fund Council Tax Support expecting to top up DHP by the end of
schemes and the cost of protecting discounts the year to meet demand. The proposed
for those who previously qualified for council reduction in DHP funding by £40 million
tax benefit is getting bigger every year. The cannot be justified, particularly in light of
unfunded cost to councils in 2015/16 of the significant constraints on councils and
maintaining the entitlements of the previous claimants to reduce demand.
council tax benefit scheme is £1 billion.4 The ongoing demand associated with the
The provision of £74 million additional funding welfare reforms remains as a significant
for local welfare assistance and health and number of those affected have been unable
social care will help councils to continue to make the necessary adjustments. In
to support some of their most vulnerable particular, the number of households affected
residents. However, this still amounts by both the benefit cap and the removal of
to a reduction of almost £100 million in the spare room subsidy has remained broadly
government funding for local welfare. flat over the last year.
5 DWP DHP update December 2014: https://www.gov.uk/
government/uploads/system/uploads/attachment_data/
4 Council Tax Support: the Story Continues (LGA 2015) file/389060/use-of-DHPs-apr-to-sept-2014.pdf
10 The LGA’s Budget 2015 SubmissionAt the same time the reductions in Housing
Benefit entitlements have contributed to “Almost 600,000 people came to
increased housing pressure in high rent, high StepChange Debt Charity for help with
demand parts of the country such as London problem debt in 2014. Many people fall
and the South East. The announcement of into problem debt when they do not have
additional Targeted Affordability Funding the savings or spare income to cope with
will help, but does not allow discretion for changes to their circumstances or sudden
councils, and will only address a small costs.
proportion of the shortfall in housing costs. “Problem debt leads to £8.3 billion
in social costs, many of which are
shouldered by local government –
“Centrepoint have supported the
including some of the £2.8 billion costs
devolution of many responsibilities to
of people losing their home as a result
local councils, including those around
of debt, £658 million in additional social
housing and benefits. But these powers
care costs, and £229 million in the cost of
have not always come with the funding
children being taken into care as a result
to properly resource them. Providing
of family breakdown due to debt.
certainty over funding for local welfare
assistance schemes in 2015/16 is a step “Local authorities therefore have a key
forward but a future government must look interest in helping residents avoid falling
again at whether these successful local into problem debt, and need to build
programmes have sufficient funding to their capacity in providing that support.
meet ever increasing demand.” One key way they can help is through
low cost loans and grants provided via
Centrepoint, February 2015
local welfare assistance. But successive
reforms and cuts have led to extreme
rationing of loans, leaving people with little
certainty they will be eligible for support.
Just 7 per cent of people think they would
be eligible for a welfare loan, compared
to 21 per cent who think they would be
eligible for a payday loan.
“Local government needs a long term,
certain funding stream to meet the
demand for low cost credit and provide
enough certainty that everyone who
needs it can get it.”
StepChange, February 2015
The LGA’s Budget 2015 Submission 114. Education and children’s
social care
We call on the Government to: The Government has committed to a
consultation on mandatory reporting of
• Reverse the 48 per cent cut in the child abuse, and the Child Abuse Inquiry
Early Intervention Grant to councils will further raise the profile and encourage
recognising that this is a false economy that more people to come forward – current child
will increase costs elsewhere in the public victims, but also adults in need of support.
sector. The LGA welcomes such moves and would
• End restrictions preventing schools always encourage people to report abuse
and councils from pooling budgets to and seek support where needed, but it must
integrate child protection and narrow the be resourced.
attainment gap for deprived pupils.
When it came to office the Government
• Make five year allocations of schools professed its commitment to the importance
capital to a single local capital pot in of preventative services by creating a non-
each area to free councils and schools ringfenced Early Intervention Grant for
to work together to make the most efficient councils. But these resources have been cut
use of scarce capital to provide new places by 48 per cent, from £2.7 billion in 2010/11 to
and repair and rebuild crumbling schools. £1.4 billion in 2015/16. This cut stops councils
from investing in services which improve
Councils have faced sharply increased demand
children’s outcomes and reduce demand for
for children’s social care since the Peter
more costly interventions.
Connolly case in November 2008, resulting in a
22 per cent rise in referrals, a 65 per cent rise in Schools have been protected from the cuts
children subject to a child protection plan and a councils have faced, but Department for
16 per cent increase in the number of children Education (DfE) rules prevent them from
in care. pooling resources with councils to provide
integrated early help services.
They have responded by reducing costs and
remodelling services. But in the face of cuts Schools have important responsibilities for
they have also had to protect budgets for this safeguarding, and schemes to make sure
vital service by cutting investment in other children are ‘school-ready’ have been shown
preventative services. 2014/15 budget figures to be effective in boosting the attainment
show falls of 20 per cent for spending on of the most disadvantaged pupils. Schools
children’s centres and early years, and 45 per and councils must be freed to work together
cent in spending on youth services over the to provide joined-up services to improve
four years of the 2010 Spending Review. By outcomes for local children.
contrast, spending on looked-after children
rose by 26 per cent, and on safeguarding by Councils have responded well to the
21 per cent. challenge of sharply rising demand for new
school places, but there is still much to do to
Demand pressures are likely to increase. meet the estimated 880,000 extra places that
Some areas have already seen increased will be needed by 2023.
demand for referrals as a result of high profile
child sexual exploitation cases including
findings from the Jay report in Rotherham.
12 The LGA’s Budget 2015 SubmissionThe current system for distributing schools
capital is a classic case of Whitehall “Evidence shows that early help for
fragmentation, bureaucracy and central children and families can save money
control, with separate allocations for and reduce pressure on services in
rebuilding schools, school maintenance the long-term. The right intervention
and new school places, allocated through a can also radically improve the lives of
plethora of central and local programmes. children and families. Whether it is a
targeted programme or a service open
The independent James Review of schools to all, providing support as the first signs
capital6, commissioned by the Government, of a problem emerge can make a real
said that the DfE “should avoid multiple difference.
funding streams for investment that can
and should be planned locally, and instead “A lack of funding for investment in early
apportion the available capital as a single, help services only stores up problems for
flexible budget for each local area.” In the the future. There is an increased financial
last Spending Round a £21 billion schools cost of providing crisis interventions whilst
capital allocation for 2015/20 was announced leaving children and families to deal with
and the Government now needs to make a substantial personal challenges that could
corresponding five-year allocation to local have been avoided.
areas, paid into local capital pots. “Research from Action for Children has
found early help services are facing
an increasing demand for help just as
budgets are scaled back. Although
services are finding innovative ways to
provide support to maximise resources,
this approach can only take us so far.
“Reductions in the early intervention
spending by local authorities come at a
time when it should be growing. Increased
use of community budgets and protecting
funding must be a priority. Politicians of all
parties face difficult financial decisions,
at both national and local level, in the
coming years. By placing early help at the
heart of public services, we can reduce
reliance on expensive crisis interventions
and deliver the support children and
families need.”
Action for Children, February 2015
6 https://www.education.gov.uk/consultations/
downloadableDocs/James per cent20Reviewpdf.pdf
The LGA’s Budget 2015 Submission 13“Barnardo’s supports more than 200,000 “The Children’s Society works with
of the UK’s most vulnerable children and some of the most vulnerable children
families through over 900 services across in the country. We have experience of
the UK. We know that demand for support the valuable help which can be offered
is increasing. Our services for sexually when you are able to intervene early
exploited children helped almost twice as before a problem has developed and the
many children in 2013/14 as in 2009/10. damaging impact of leaving a child to
spiral into crisis.
“Beyond this, our services are supporting
young people with particular challenges “Projects like the Children’s Society
– care leavers, homeless young people, ‘Scarpa’ programme in Newcastle shows
and teenage parents – who are struggling that helping children who may fall into
to make ends meet, due to the increased trouble not only makes their lives better
cost of living, and the introduction of but also saves the Government money in
tougher conditionality and sanctions in the long term.
the benefits system. While our services
“The project involves intensive one-to-
do offer emergency funding, this is not a
one work with young people at risk of
sustainable solution.
running away. An evaluation showed
“Barnardo’s believes all children should that 70 per cent of young people and
have the same chance to thrive. The earlier families involved in the project recorded
support is put in place, the more likely it improvement in the issues they asked for
is that challenges can be overcome. We help with.
therefore urge the Government to continue
“This is helped lead to a reduction in
to promote community budgets to make
the number of children running away by
it easier to embed early intervention in
two thirds, saving the police millions of
decision-making.”
pounds.
Barnardo’s, February 2015
“Many services have struggled as a
result of cuts to funding. For example, the
Early Intervention Grant provided crucial
support for services such as Sure Start
children’s centres. The value of this grant
has been halved since 2010.”
The Children’s Society, February 2015
14 The LGA’s Budget 2015 Submission5. Growth, skills and
infrastructure
We call on the Government to: After the protracted negotiations to agree
these deals, no more time and resources
• Implement funding and policy must be taken away from delivery on the
commitments in the Growth Deals swiftly ground. Funding and policy commitments
without imposing bureaucratic hurdles. need to be implemented as swiftly as possible
• Devolve all funding for local growth, so that local partners can get on with the
regeneration, skills and employment vital job of boosting economic growth in their
support through councils to Local areas, which will lead to the rebalancing of
Enterprise Partnerships in a single our national economy.
investment fund.
The funding landscape for growth,
• Inject a further £1 billion a year into regeneration, skills and employment is as
roads maintenance by investing the complex as it gets. LGA research identified
equivalent of just 2 pence per litre of over 120 funding streams across 20
existing fuel duty. This should not be paid government departments amounting to over
for by increasing the fuel duty rate. £22 billion in 2013/14 alone. Up to 60 of these
• Fully fund the cost of the concessionary funding streams were based on competitive
fares scheme and allow councils to have allocation. With an estimated average cost to
greater control over all bus subsidies and councils of preparing of over £30,000, had
local provision. a council wanted to apply for all those bid-
based funding streams, it might have had to
• Guarantee the 39 LEP areas strategic spend as much as £1.8 million. It is clear that
decision making powers over how, when this method of stewardship of public funds is
and on what their share of England’s not efficient or sustainable, does not provide
2014-2020 £5.3 billion European value for money and should be reconsidered.
Structural and Investment Funds (ESIF)
is spent. Addressing our ever-worsening roads crisis has
to be a national priority. Recent harsh winters
Councils and local businesses continue to and decades of underfunding by successive
aspire to lift the economic performance of governments have created a national backlog
their area through productive partnerships of road repairs that would take £12 billion and
supported by investment in the skills of local a decade for councils to fix.
residents and local infrastructure.
Improving our roads would also help
However, they have been hamstrung in their businesses suffering from congestion caused
efforts to do this because our paradoxically by frequent road repairs. A national survey
centralised yet fragmented system often commissioned by the LGA showed that 83 per
creates significant delays in getting funding cent of those polled back our call to divert an
to projects and ties up delivery partners in annual £1 billion of fuel duty to fix local roads.
unnecessary bureaucracy. It is vital that this
pattern is not replicated with the Growth Deals.
The LGA’s Budget 2015 Submission 15This is only 2p in every litre but would go a
long way toward dealing with the pothole “In recent years, bus users have been hit
backlog and transparently demonstrate hard by cuts in public spending, causing
to motorists that their money is not being real hardship for many.
squandered elsewhere. “We want to see a national roll out of the
Buses support local economies by getting Total Transport initiative currently being
people to work, schools, training, shops and trialled. This brings together the money
public services. More people commute to spent of bespoke transport services by
work by bus than all other modes of public different public bodies – for example
transport combined. inter-hospital link services, social services
transport to take older people to day
Reductions in government funding for the centres, and transport for children with
statutory concessionary fares scheme of £60 special needs to and between schools.
million means there is less funding available
to councils to support commercially unviable “The concessionary pass scheme needs
services. Since 2010, together with reductions to be fully funded, encouraging the 10
in council core funding, this has led to a 15 million pass holders to lead healthy
per cent cut in council funding for buses, active lives and to help to tackle social
that’s 2,000 services reduced or withdrawn. isolation. At the same time government
should standardise and enhance
Rather than supporting commercially viable concessionary travel schemes for younger
services, the Bus Service Operators’ Grant people, especially those in education, on
(BSOG) should be devolved to councils so apprenticeships or out of work.
that public funding can be better targeted
according to local needs. “Finally, a local connectivity fund should
be established to bringing together
Ministers have committed to the devolution of existing bus funding from the Department
spending decisions for ESIF to 39 LEP areas7 for Transport with contributions from
and the LGA and its member councils expect Departments including Work and Pensions,
it to happen, as do local businesses. However, Health, Education, Environment and all
so far decisions fall short of the promises, parts of government whose objectives rely
do not meet the European Commission’s on good bus services being in place.
own ambition for a “simpler, more local”
programme and do not go hand-in-hand with “With the threat of further steep cuts to
Growth Deals and devolution to other parts of come, we urgently need new initiatives
the United Kingdom. which recognise the vital social, economic
and environmental role buses play.”
Without a strategic, Technical Assistance (TA)
funded role, confidence from local businesses The Campaign for Better Transport,
and politicians will diminish, and they will February 2015
walk away if their ability to influence spend
is reduced, because it will be hampered by “Local authorities have a unique position
protracted Whitehall-local negotiations which in their communities, able to bring
will slow down decision-making on projects services together, forging partnerships
and have unintended consequences on local and strengthening referral networks. It is
growth. through such work that they are able to
help unemployed people who are beyond
the reach of national programmes.”
7 HM Government. The Development and Delivery of ESIF
Programmes, July 2013. Paras 1.5, 1.8 and 2.19 Heather Rolfe, National Institute
https://www.gov.uk/government/uploads/system/uploads/
attachment_data/file/224755/13-1049-development- of Economic and Social Research,
and-delivery-european-and-investment-fund-strategies- January 2015
guidance-for-leps.pdf
16 The LGA’s Budget 2015 Submission6. Local government finance
Council tax Council tax referenda dilute the meaningfulness
of voting in local elections, and are poor value
We call on the Government to: for money. If councils decided to stage a local
vote it would cost at least £100,000, all to ask for
• Introduce more local flexibility over who approval of a council tax rise which could be as
receives the single person discount to little as 38p8 per week or even less for smaller
help ensure support goes to those who authorities such as fire authorities.
need it most.
Council tax relief should be given to the
• Relax council tax referendum rules to
thousands of volunteers who improve life
allow local communities to decide on local
in their areas by giving up their time to do
policy priorities through the ballot box.
things like help run local libraries, museums
• Introduce and fund a new council tax and leisure centres. It would reward those
discount for volunteering to support who demonstrate a sustained commitment
voluntary work across the country. to improving life in their local areas in a way
which saves other council taxpayers money.
For something that is perceived as the main
local tax, council tax has become anything Estimates by the LGA suggest that if
but. Council tax ratios between various bands government was to establish a £50 million
and the property values of those bands are start-up fund, 500,000 volunteers could be
set in primary legislation and councils are offered a discount of 10 per cent on their
severely limited in changing the average council tax bill next year, in return for helping
council tax as well. Council tax discounts are the public purse save many millions more.
also a very rigid mechanism.
They are based on a national, one-size-fits-
all approach which leaves local areas with
little flexibility in making sure that the burden
of taxation is spread fairly within the local
community.
A prime example is the single person discount,
which does not allow local authorities to
differentiate those who truly need the discount
from those who don’t, for example based on
their financial means to pay.
8 The figure is based on a 2 per cent increase on the average
council tax of a Band A property in England in 2014/15.
The LGA’s Budget 2015 Submission 17Business rates The LGA supports the principle of fairer
distribution of the tax burden among
We call on the Government to: different types of businesses in the age of
e-commerce as long as it does not affect total
• Bear the full cost of appeals raised business rate income.
before April 2013.
We welcome the government’s commitment
• Give more powers to local authorities
to tackle business rates avoidance and
to tackle avoidance.
the consultation document published in
• Increase the local share, while adjusting December 2014. The LGA has been working
the top-up and tariff mechanism with the Treasury and DCLG on this issue.
accordingly so that local areas do not
lose out. Emerging evidence suggests that this
is a problem for authorities and that the
Information about non-domestic rates government need to give them more
collected by local authorities in 2013/14 powers to tackle it; perhaps a power not
which was released in late 2014 shows to award discounts or exemptions when
that the impact of backdated appeals has the arrangements appear to be there for
plunged the majority of local authorities avoidance purposes. Reform should
into a deficit on the local share, with a include looking at where business rates
total demand for the safety net of over are not being paid; this may call for a reform
£200 million in that year alone. of the concept of ‘beneficial occupation’.
Analysis reveals that the main reason for 2015/16 marks the first time in the existence
this is the impact of backdated appeals of the business rate retention system when
which were raised before April 2013. the revenue support grant paid out by central
Had those appeals been dealt with in a government is less than the centrally retained
timely manner, the costs would have been business rates. This provides government
covered by central government in full. Local with room to gradually increase the share of
government is paying the cost of central locally retained business, up to 80 or 90 per
government’s delays. cent towards the end of the decade whilst
also equalising for need.
We welcome the government’s commitment
to review the system of business rates.
However we are concerned that the Terms of
Reference has not yet been published. We
would welcome the opportunity to be part of
the review and expect it to be neutral in terms
of yield.
The review should look at the risk arising from
appeals and how speculative appeals which
put avoidable pressure on the system could
be discouraged.
18 The LGA’s Budget 2015 SubmissionOther local government At a time of unprecedented demand for, and
shortage in supply of, affordable housing,
finance principles local authority Housing Revenue Accounts are
not only a way to fix a market failure, but are
We call on the Government to:
also one of the safest investments possible.
• Allow local authorities to set local
licensing and planning fees. “Most of all, I hope that by the end of your
• Lift the housing borrowing cap tenure we see a whole swathe of areas
altogether. and regions in England able to set much
of their own policy and raise their own
Charges for licensing and planning taxes. If we are serious about devolving
procedures should genuinely reflect local power this should include many of the
circumstances. On licensing, estimates tax raising and spending powers that
suggest that local authorities are diverting Scotland, Northern Ireland and Wales are
at least £1.5 million a month from under increasingly enjoying.”
pressure services to pay for processing
applications, holding consultations and Rob Whiteman, Chief Executive,
hearings and investigating and taking action Chartered Institute of Public Finance
on licensing breaches. and Accountancy, Open Letter to
Melanie Dawes, Permanent Secretary
On planning, the taxpayer is currently of DCLG, January 2015
subsidising 40 per cent of the estimated £365
million annual cost of processing planning
applications. This is unaffordable at a time of
“The FSB agrees that Business rates
funding cuts.
need total reform. The opaque,
Planning is essential to economic growth and regressive system has lost the support
locally set planning fees would ensure that the of the business community. The next
planning service is fully resourced to manage Government should commission an
growth, boost the speed of development and independent review, to create a new
improve certainty and quality of service for model that will unleash jobs and growth.”
business.
Federation of Small Businesses (FSB),
The planning fee is a tiny proportion of February 2015
development costs and many applicants
would be willing to see planning fees set
at a local level if there were safeguards
(for example that fees reflect the costs of
delivering the service) and a consistent level
of good service.
The government should remove investment
in homes through the Housing Revenue
Account from the Public Sector Borrowing
Requirement and lift the housing borrowing
cap altogether.
The LGA’s Budget 2015 Submission 19Local Government Association Local Government House Smith Square London SW1P 3HZ Telephone 020 7664 3000 Fax 020 7664 3030 Email info@local.gov.uk www.local.gov.uk © Local Government Association, February 2015 For a copy in Braille, larger print or audio, please contact us on 020 7664 3000. We consider requests on an individual basis. L15-65
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