By Richard Johnstone | 9 November 2012
Three city council leaders have urged Whitehall to give earlier notice of the local government funding settlement, warning that last-minute changes are leading to ‘ill-informed decision making’.
In a letter to Local Government Secretary Eric Pickles, the leaders of Brighton & Hove, Portsmouth and Southampton asked for greater certainty over future local government funding.Jason Kitcat, the Green leader of Brighton & Hove, Gerald Vernon-Jackson, the Liberal Democrat leader of Portsmouth and Richard Williams, the Labour leader of Southampton, say the government’s decision to publish the Local Government Finance Settlement in December, alongside late changes to the government’s policy on council tax, has hampered town halls’ budget setting for 2013/14.
At the Conservative Party conference last month, Pickles set out proposals for a council tax freeze and also said he would lower the cap triggering a local referendum on council tax rises from 3.5% to 2%.
But the leaders say this change means councils that were planning for a 2.5% increase, broadly in line with inflation, will now have to either hold a referendum costing up to £300,000 or propose a smaller increase. Most councils have already begun their budget setting process, and both these scenarios create a new budget shortfall.
Changes at such short notice can lead to short-term and ill-informed decision making, the letter stated.
Vernon-Jackson, who is also the LibDem leader in the Local Government Association, said: ‘Yet again, a change at the last minute means that our careful planning has been undermined.
‘Government needs to work with councils by providing far greater clarity far sooner. We call on Eric Pickles to overhaul the way council funding is communicated, laying out government funding policy for the remainder of this Parliament and ideally beyond.’
The leaders also argue that sensible financial planning is made more difficult by the ‘inconsistency’ in figures provided by government.
The 2010 Comprehensive Spending Review suggested local government funding would be reduced by 0.8% in 2013/14, following two years of far more significant cuts. The councils assumed this figure was likely to be higher, and had been working on the basis of reductions nearer to 7%. However, as part of a consultation on business rates launched in August, it was suggested that the reduction might exceed 12% when the final figures are published in December.
Williams said: ‘We acknowledge central government’s approach to reduce public spending but we need some degree of certainty about the level of reduction to be able to plan properly. The difference between cuts of 0.8% and of 12% or more is millions of pounds for our councils. To leave telling councils how much money they will receive so late in the budget process can only lead to rushed decisions. We want to make the right decisions. It is Eric Pickles’ job to help us do this.’
Responding to the letter, local government minister Brandon Lewis said councils should trust in the public in council tax referendums.
He said: ‘If those councils feel they have a good case to put they should go to the public, ask the public and trust the public are happy to pay that money for the service they provide.’
