Labour pledges £500m in local government savings

11 Dec 14
The next Labour government would save more than £500m from council funding by expanding shared service schemes across local authorities, senior figures have announced.

By Richard Johnstone | 10 December 2014

The next Labour government would save more than £500m from council funding by expanding shared service schemes across local authorities, senior figures have announced.

In the latest report from the party’s zero-based review of public spending, shadow chief secretary to the Treasury Chris Leslie and shadow local government secretary Hilary Benn also announced they would end the government’s controversial New Homes Bonus scheme.

Benn and Leslie said the party planned to ‘support and empower’ councils to unlock savings through increased collaboration. 

The review, which is published on the day Labour leader Ed Miliband set out his deficit reduction strategy, found shared services, including of back-office functions, could unlock £500m from 2016/17 onwards.

To incentivise collaboration, savings would be available to reduce pressure on frontline services, but an expectation of savings would also be ‘built in’ to local funding settlements.

Leslie also reiterated that the party intended to provide local authorities with multi-year budget settlements, which would enable councils to better overcome any up-front costs. Labour also would ‘not stand in the way’ of more fundamental changes, including moves to unitary authorities.

The party confirmed it would end the government’s New Homes Bonus, which is intended to incentivise councils to approve construction of more homes.
Labour had previously pledged to review the scheme, and Leslie said the review had found it to be ‘complex, regressive and ineffective’. Funding made available for the New Homes Bonus would be reallocated within local government, he said.

As part of the savings drive, proposals to merge some of the 46 fire and rescue authorities in England would also be examined, which could save as much as £83.6m.

Setting out the plans, Benn added that these proposals – coupled with plans to devolve control of £30bn of government spending – would allow local services to be built around people and places rather than institutional and administrative boundaries.

‘By passing powers and resources down from Whitehall to local communities we can make savings and ensure that the money we have is better spent,’ he added.

Responding to the plans, local government minister Kris Hopkins said the coalition was already delivering these local government savings as part of its own plan to close the deficit.

‘Labour’s call to cut council funding in the form of New  Homes Bonus is just robbing Peter to pay Paul, and will mean a return to the bad old days where councils are penalised for building new homes,’ he said.

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