Spending Review must make council finances sustainable, says CCN chair

27 Jul 15

The new chair of the County Councils Network has called for the forthcoming Spending Review to put local authority finance on a more sustainable footing.

In his first comments in the post, chair-elect Paul Carter said counties needed a fairer funding deal, and added he expected the government to come forward with bold devolution plans for all of England.

Carter, who is leader of Kent County Council, said the Spending Review, which could cut as much as 40% from departmental funding, must “radically reform the system of local government finance”.

As part of a long-term sustainable deal, there should be changes to some funding incentives, including business rates retention and the New Homes Bonus.

CCN set out these proposals in its County devolution manifesto before the election, concluding that existing funding arrangements failed to reflect local needs and restricted innovation.

Today’s report called on the government to consider increasing from 50% the amount of business rate growth retained by local authorities. The network highlighted that England’s 37 county councils only received one fifth of this rate growth, with districts retaining the remainder and unitary councils keeping the entire amount.

It also suggested the New Homes Bonus be reformed as it provided little incentive for CCN member councils, with two-tier counties receiving only 20% of total payments under the scheme.

Carter also said the CCN would oppose further funding reductions for councils. While supportive of the government’s deficit-reduction objectives, he said he could “not stand-by while counties shoulder a disproportionate burden of deficit reduction or are unduly penalised”.

He added: “Local government has made the most significant contribution to restoring the public finances since 2010, but we are approaching the boundaries of what is possible without substantially reducing services. It is essential that the chancellor delivers a sustainable funding settlement that allows us to maintain statutory frontline local government services to our communities.

“It is also an issue of fairness. Counties face unrelenting demand pressures in areas such as adult social care, but receive four times less funding. Government needs to look at how counties areas can be fairly funded to meet the specific needs of their local populations.”

On devolution, Carter welcomed the Cities and Local Government Devolution Bill, but stated that fundamental and long-lasting decentralisation would only be achieved by focusing on ambition and outcomes. Ministers should not focus on “process and creating additional unnecessary bureaucracy”, he said.

“I fully support the government’s agenda on devolution and deficit reduction and I look forward to working with ministers across Whitehall to achieve real devolution to county areas.

“Many counties are already negotiating deals with ministers and my priority is ensuring no one-size-fits all approach to county governance and devolution proposals fully exploit the economic and reforming potential of county areas.”

Did you enjoy this article?