30 April 2004
The Raynsford review of local government finance could amount to nothing – with the current regime surviving in its present form, a senior civil servant has told MPs.
Lindsay Bell, director of local government finance at the Office of the Deputy Prime Minister, indicated that the Balance of Funding review could still conclude that reform was unnecessary.
Giving evidence to the Commons' Office of the Deputy Prime Minister select committee on April 27, Bell was asked by MP Clive Betts if no change was still an option. She replied: 'Yes, I think it is,' adding: 'Any option is still up for grabs.'
Bell's comments undermine the common assumption that the review, which has been running for a year, will lead to an overhaul of the current system whereby 75% of council money comes from central government grant.
Many in local government will greet Bell's admission with dismay. It was widely believed that the case for reform had been established and the review, due to report back in the summer, was the forum in which the nature of the changes would be thrashed out.
The timing of her remarks was particularly unfortunate, coming just two days before local government minister Nick Raynsford was due to announce that he would cap the budgets of some councils.
The Local Government Association, commenting before the authorities under fire were named, said the government's decision to cap for the first time since 1997 highlighted the failure of the current finance regime.
Its chair, Sir Jeremy Beecham, said capping would merely add to councils' financial pain and reform was now an urgent necessity. 'The answer is a system of local taxation that ensures councils have much more control of their income, and can take full responsibility for their spending decisions through local elections.'
He claimed that, if rumours of six councils, three police authorities and five fire authorities being capped turned out to be true, the cost of rebilling would be £7m. This would have to be borne by council taxpayers.
Capped authorities would also be forced to cut spending on specific services part way through the financial year, Beecham warned. 'This is not a recipe for good government,' he added.
Authorities have 21 days to appeal against the decision to cap them and the LGA has pledged strong backing for any that do so.