Three-year budgets would help councils

8 Jun 09
Councils would be better able to protect their communities from the recession if they were allowed to set three-year budgets, a New Local Government Network report has argued

15th May 2009

By David Williams

Councils would be better able to protect their communities from the recession if they were allowed to set three-year budgets, a New Local Government Network report has argued.

The report, published on May 15, said a three-year cycle would give local authorities more freedom to act than the current system of matching spending to income every 12 months.

NLGN director Chris Leslie said the change would allow councils to invest during hard times and pay for it when their income improved.

He argued that as authorities’ central government grants were already allocated over three-year periods, applying the principle to their budgets ‘would not require a giant leap’ and that this was a reform whose time had come.

‘The current constraints placed on local authorities might create more harm than benefit, especially at a time when precisely targeted local interventions to help specific employers, workforces or neighbourhoods might be required,’ he said.

‘The current maturity in local authority financial competence should allow rules to be revisited and refreshed.’

The NLGN report said a three-year budget system would enable councils to issue council tax discounts in times of hardship, and retain resources that would otherwise have to be scrapped to meet annual budgets.

Leslie has urged the government to amend the Local Democracy, Economic Development and Construction Bill, published on December 5 last year, to allow for the change.

A Local Government Association spokesman said: ‘Anything that gives councils more flexibility over how they spend their money in the interests of local people is a good thing.’

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