Report of the Deputy Chief Executive (Place)
The Cabinet considered a report of the Deputy Chief Executive (Place), which set out proposed responses to two Government consultations on Local Authorities’ Relative Needs and Resources and Business Rates Retention Reform.
The Government issued two consultation documents on the 13th December 2018 entitled “Review of Local Authorities’ Relative Needs and Resources” and “Business Rates Retention Reform”. The consultations form part of the Government’s over-haul of local government finance which is due to take effect in the financial year 2020/21. This would incorporate an overall settlement determined by the 2019 Spending Review, new baseline funding allocations for individual local authorities informed by an up-to-date assessment of their relative needs and resources and the impact of a new 75% Business Rate retention model. Responses are required by 21st February 2019. The proposed Council responses were attached to the report submitted as Appendices 1 and 2.
The significance of the outcome of such a consultation make it important for the Council to add its own response. The majority of the consultation questions focus on detailed technical aspects of the potential funding arrangements. Given the lack of transparency of the current funding model and the length of time that it has been in operation, it is not possible to draw firm conclusions on the likely impact of any changes to the funding arrangements implied by the Council’s responses. The expectation should be that such a review results in a system that is evidence based, robust and fair from the Council’s proposed responses are aimed at achieving such an outcome.
The responses incorporate the following broad elements:
· Notwithstanding how resources are allocated in any new system, the most important factor is how much funding is available. This will be determined by the Spending Review rather than the outcome of these consultations.
· The system must continue to protect authorities with higher needs and which may end up being losers between the baseline resets.
· The new arrangements should push for a more dynamic system with regular refreshes, up to date data, baseline rests and quicker ‘transitions’ (e.g. not damping that goes on for ever).
· The response makes the point that arguments from some authorities around sparsity and negative Revenue Support Grant (RSG) are not evidence based and should not be allowed to distort the outcomes.
· Councils should gain the benefit or bear the cost of local decision making (so resource needs should be assessed using notional assumptions of Council Tax not actual levels and not adjusting for local decisions on Council Tax Support).
· The response argues against fees and charges being adjusted for within the system on the basis that it is impossible to measure their impact reliably.
· The response argues for partial and phased element of resets and for Councils to keep the majority of Business Rates growth that results from local economic growth.
The Cabinet noted that the report had also been considered by the Finance and Corporate Services Scrutiny Board (1) at its meeting on 6th February 2019 and a briefing note setting out their discussions and recommendation was provided to the Cabinet, who supported their recommendation to ask Government to undertake suitable Equality Impact Assessments on the proposed changes.
RESOLVED that the Cabinet:
1. Considered and agreed the comments and recommendations from the Finance and Corporate Services Scrutiny Board (1).
2. Recommend to Council that they approve the attached consultation response, including the recommendation from the Finance and Corporate Services Scrutiny Board (1), to be sent to the Ministry of Housing, Communities and Local Government.