LGA and ODPM bury the hatchet for now

3 Nov 05
Central and local government have agreed to patch up their differences and work together to try to keep council tax rises low following angry exchanges earlier in the week.

04 November 2005

Central and local government have agreed to patch up their differences and work together to try to keep council tax rises low following angry exchanges earlier in the week.

A November 2 meeting between Chief Secretary to the Treasury Des Browne, local government minister David Miliband and Local Government Association top brass was hailed by both sides as constructive.

Sources at the Office of the Deputy Prime Minister told Public Finance that ministers had agreed to look again at figures ahead of the finance settlement early next month.

'Both sides are going to work together for the common good. The LGA don't want high council tax rises and nor does central government,' the source said.

The LGA added that both sides had agreed to meet again next week.

Click here to see how the extra pressures on the councils breakdown (this will open up a new browser window)

The run-up to this year's finance settlement got off to bad start after the ODPM accused the association of crying wolf over a black hole in councils' finances. This in turn prompted LGA chair Sir Sandy Bruce-Lockhart to condemn the government's use of 'remarkably irresponsible language'.

In the association's Pre-Budget submission, published on November 1, it warned that council tax could rise by as much as 10% – more than £100 a year on the average Band D household – unless ministers plugged a £2.2bn funding gap.

A LGA survey of almost 70% of council finance directors identified rising costs totalling some £2.8bn. Although the Treasury has agreed to fund some new burdens, including pensions, licensing and the costs of extra asylum seekers, this still leaves a shortfall of £2.2bn.

Bruce-Lockhart said: 'The government has introduced new standards and is making ever more legislative and policy demands on councils without providing an equivalent level of funding.

'The proposed increase in government grant of £300m is not even enough to cover basic inflation.'

The LGA maintained that its submission was not a 'wish list' but was based on what 'local government must do if both national and local priorities are to be addressed'.

But the ODPM was dismissive. 'The LGA's claim of a huge funding gap has become an annual event,' a spokesman said. He added that the LGA had cherry-picked only the highest estimates of council pressures and said others were uncertain: 'For example, a pressure of £68m in street cleansing, where [the LGA] has admitted that it was difficult to quantify costs.'

Despite the rapprochement, the ODPM insisted that it stood by this view and remained suspicious of many of the LGA's figures.

PFnov2005

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