19 December 2003
Senior local authority figures this week warned councils to seize the opportunity to shape Whitehall's Balance of Funding review or face an unpopular regime being imposed upon them.
Addressing the Local Government Association's annual general assembly on December 16, Sarah Wood, the association's incoming finance director, said now was the time to 'get rowdy, get active and get radical' in informing ministers' decisions.
Local government minister Nick Raynsford indicated in October that he would undertake far-reaching reforms of the way council cash is realised, with the intention of allowing authorities to raise more funds directly. Currently, 75% of council money comes from Whitehall.
A Raynsford-chaired review group will report on the issue next year, but Wood told Public Finance that individual councils have been slow to inform that review.
Measures being considered include local income taxes (something CIPFA is analysing), returning business rates to local authority control, an overhaul of the current property tax system (which is being looked into by the New Policy Institute) and additional revenue sources, such as road charges.
Commenting on the review in light of the furore over council tax hikes, LGA chair Sir Jeremy Beecham said: 'In its discussion with government, the association needs firm evidence.
'We are, therefore, asking councils, as they move towards… their budgets, to supply us with details of efficiency savings, inescapable cost pressures, uses of balances and cuts in services, so that we have the evidence to put before government on which to base a vigorous defence of local decision-making.'
Wood told PF: 'Now is the time for councils to think radically and progressively about overhauling the current system. There is no perfect solution, so what emerges must be the best option and one that has withstood intense scrutiny.'
In an earlier seminar, Wood had shown delegates how it was possible to switch to a system whereby just 25% of council cash came from Whitehall.
But a fierce debate among councillors indicated how difficult it would be to reach agreement on a popular system.
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