On behalf of its membership, the cross-party LGA regularly submits to Government
consultations, briefs parliamentarians and responds to a wide range of parliamentary inquiries. Our recent
responses to government consultations and parliamentary briefings can be found here.
The Local Government Association (LGA) is here to support, promote and improve local government. We will fight local government's corner and support councils through challenging times by making the case for greater devolution, helping councils tackle their challenges and assisting them to deliver better value for money services. This response has been agreed by Lead Members of the LGA Resources Board.
In our view, the proposals in the two consultations earlier this year were a valid attempt by CIPFA to alleviate some of the worst of the short-term problems, problems that are both a major aspect of the current crisis and a symptom of the long-term problems. It is therefore disappointing that it has not yet been possible to finalise a satisfactory outcome in response to those proposals.
Property continues to provide a good basis for a local tax on business. Business rates is efficient to collect and has been relatively predictable and buoyant in recent years. However, the changing nature of business alongside the nature of demand pressures on councils means that we cannot look to business rates to form such a substantial part of local government funding in the future and alternative means of funding councils will be needed instead of or as well as a reformed business rates system, of which one example is a tax on online businesses.
The Treasury Management Code of Practice (“Treasury Management Code”) was introduced in 2001/02. Local authorities are required to “have regard” to the code in setting up and approving their Treasury Management arrangements.
Sound financial management is crucial to the financial resilience of councils and Cipfa’s proposed new code is a welcome addition to the tools and guidance that councils can use to achieve that.
In our view, the revised code as drafted exceeds this brief of determining how much a council can afford to borrow. The proper place for detailed guidance on local authorities’ investments is the Government’s statutory guidance on local government investments, which itself is another part of the Prudential Framework for local authority capital finance.
We agree that the current system for the payment of schools’ business rates could be rationalised, although something like the proposed system is currently used in some unitary authorities for maintained schools. We also note that the proposed system would not alter the liability for business rates and also that it will still be part of school funding formulae and will have to be accounted for as part of schools’ accounts.
Key messages
The Government forecasts the total funding available for council services to be broadly similar in 2019/20 as it is today. In the first year according to the provisional Local Government Finance Settlement there is a fall in ‘core spending power' of 2.8 per cent. Without any increase in council tax there is a fall of 5.3 percent.