The LGA's Budget 2015 Submission - February 2015 The LGA's Budget 2015 Submission

The LGA’s
Budget 2015

February 2015

                   The LGA’s Budget 2015 Submission   1

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        3
1. 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
                                                  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.
mechanism on local authorities.                       2014+Resident+Satisfaction+Polling+-+Final+Report.pdf/

4     The LGA’s Budget 2015 Submission
The 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

                                                           The LGA’s Budget 2015 Submission         5
4. 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
                                                 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 Submission
2. 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
                                                    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
                                                    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                     7
The 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        9
3. 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:
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 Submission
At 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         11
4. 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 Submission
The 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

    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
 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 Submission
5. Growth, skills and

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        15
This 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
     attachment_data/file/224755/13-1049-development-        of Economic and Social Research,
     and-delivery-european-and-investment-fund-strategies-   January 2015

16       The LGA’s Budget 2015 Submission
6. 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

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                   17
Business 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 Submission
Other 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.”
                                                   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      19
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