Labour would direct council funding to most deprived, says Benn

24 Sep 13
Labour would reform council funding to ensure money goes to those parts of the country with the greatest need, shadow local government secretary Hilary Benn has said today

By Richard Johnstone in Brighton | 24 September 2013

Labour would reform council funding to ensure money goes to those parts of the country with the greatest need, shadow local government secretary Hilary Benn has said today.

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Addressing the Labour party conference in Brighton, Benn said that the coalition government’s council funding reductions had ‘imposed the deepest cuts on our most deprived communities’. He added that some authorities in more prosperous parts of the country had in fact received a funding increase, including the local authority covering Prime Minister David Cameron’s seat in Witney, Oxfordshire.

‘It’s just not fair and a Labour government will change it. Money should go to meet need,’ Benn told delegates.

His comments came after David Sparks, Labour’s leader in local government, told the conference that ‘it’s only a matter of time’ before some local authorities cease to be viable in England. 

Sparks said the fate of the US city of Detroit, which has sought bankruptcy protection, showed what could happen ‘when a large council runs out of money’.

Responding to Benn's comment, CIPFA chief executive Rob Whiteman reiterated the institute's call for an independent grants commission to decide on local government funding and take it out of party politics.

'Such a commission would ensure that local government funding is based upon need and would give people across the country reassurance that resources are allocated in a manner that is objective, politically impartial, and based on best the advice,' he said.

In his speech, Benn also said what Labour would do to allow councils to build more homes. Speaking ahead of Labour leader Ed Miliband’s address later today, which is expected offer councils powers to establish new towns and garden cities, Benn said ‘our housing system is broken’.

Land is too expensive, and developers often hold large ‘landbanks’ in the hope that prices will rise further, Benn said. Labour would force developers to register the land they own and, if planning permission for homes has been granted, developers could face a time limit to start construction or be forced to sell.

A future Labour government would also give councils a ‘right to grow’, helping communities to expand, he said. 

‘We will invite local authorities to come forward, and in return, we will make sure that they get the powers and the incentives they need to acquire land, put in the infrastructure and build those new communities.’

Benn also hinted that Labour would undertake reforms to the Housing Revenue Account to enable councils to construct more homes.

Local authorities have consistently called for removal of the cap that restricts how much councils can borrow to build houses. Last week, Deputy Prime Minister Nick Clegg set out plans for the system to be reviewed, with possible changes allowing councils to pool any space under the current limits to increase building.

Alison Scott, CIPFA’s local government policy lead, said it was ‘encouraging’ that both Labour and the LibDems were now looking at reforms to council house building limits.

‘CIPFA, together with many other organisations, has long called for a removal of the borrowing cap which significantly limits councils’ power to borrow for housing,’ she said.

‘A relaxation would enable those councils which have some ‘headroom’ or borrowing capacity in their business plans to build new, affordable houses, thus providing an added boost to stimulating the housing sector and the local economy.’

Scott added that, while sensitivities around borrowing were understandable, councils’ record of borrowing under the Prudential Code proved they could trusted to act prudently.


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