w18 lg resource review - cllr houghton

12
Potential Implications of Current Resource Review Cllr Steve Houghton Leader Barnsley MBC

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Page 1: W18   lg resource review - cllr houghton

Potential Implications of Current Resource Review

Cllr Steve HoughtonLeader Barnsley MBC

Page 2: W18   lg resource review - cllr houghton

Current SystemService provision based on needs and

ability to pay Taxpayers in similar circumstances should pay the same

across the country for the same level of service.

and

It is based on relative needs of communities and differing ability to raise Council Tax of individual Authorities.

Aim has always been to achieve ‘fairness’

NNDR pooled – because it has no real relationship to service needs

Page 3: W18   lg resource review - cllr houghton

Proposed System

Service provision based upon retention of Local Business Rates with some ‘equalisation’No account of communities ability to payNo account of future needs

Page 4: W18   lg resource review - cllr houghton

Full Localisation - Deprived Hit Hardest

- Analysis excludes outliers of Westminster and City of London

-200

-100

100

200

300

400

0 20 40 60 80 100 120 140

Index of Multiple Deprivation 2007

Su

rplu

s o

r (D

efic

it)

on

NN

DR

Birmingham

Surrey

Larger Surplus

Lower Deprivation

HertfordshireHampshire

Oxfordshire

LiverpoolBradford

£m

0

Page 5: W18   lg resource review - cllr houghton

Government’s potential approach to reduce the impact?

A system of ‘tariffs’ and ‘top-ups’; with a baseline / ‘equalisation’ frozen at 2012/13 funding.Major issue of locking in existing disparities

i.e. dampingNo effective mechanism for updating needs

Authorities who generate NNDR greater than Formula Grant will pay a ‘tariff’

Authorities who generate less NNDR than Formula Grant will receive a ‘top-up’

May at first appear to deliver some ‘equalisation’

Page 6: W18   lg resource review - cllr houghton

Fairness / Equalisation Issues Modelling shows the gap between rich and poor areas

would widen. Equalisation only at the start Even if business rates and council taxes across

England grow at the same annual percentage rate* some authorities funding would grow much faster than others;

In reality likely to be much wider

* Assumed NNDR(RPI +2.5%); CT (2.5%)

Authorities with highest funding growth

One year % cash growth

Authorities with lowestfunding growth

One year % cash growth

City of London 34.9 Northumberland 5.3

Westminster 22.7 Bury 5.3

Hillingdon 10.1 Isle of Wight 5.3

Tower Hamlets 9.8 Waltham Forest 5.3

Camden 9.4 Wirral 5.3

Page 7: W18   lg resource review - cllr houghton

Equal Growth + Initial ‘Equalisation’= Growing Disparities

Modelling over a four year period, applying same growth in business rate and council tax to all authorities

Average Four Year Percentage Increase in Total Funding Available (including council tax)

22.823.1 23.3

23.7 23.7 23.8 24.0 24.2 24.224.6

29.6

22

23

24

25

26

27

28

29

30

NE NW SW SIGOMA WM EM YH EE SE OLB ILB

Region

Per

cen

tag

e In

crea

se i

n F

un

din

g

Excludes outliers of Westminster and City of London

Page 8: W18   lg resource review - cllr houghton

Fairness / Equalisation Issues Authorities with high taxbases (NNDR and CT) compared

to their needs are likely to benefit

Weaker economies will increasingly suffer

Cannot deliver Government promise of protecting more vulnerable in our society

No relationship to ongoing needs

Will give successful economies ability to reduce or remove council tax – poorer continue to pay

Likely to be more complex than current system

Survival of the Fittest!

Page 9: W18   lg resource review - cllr houghton

Incentives for Growth? Fundamental issue of ability to influence growth

Some growth just happens because of where it is Rewards go to already successful places (LABGI?)

Focus on physical growth- e.g. would exclude internet based business

No ‘kick start’ support for economic growth in more deprived areas

Deprived areas will see reducing resources – reduced ability to support the local economy

Treasury view – Local Government has little impact on economic growth

Page 10: W18   lg resource review - cllr houghton

Impact on Localism Localism should be about having funding levels to

meet local needs and deciding the best way to spend it

This model will provide different levels of Council Tax irrespective of ability to

raise by individual authorities different levels of service irrespective of needs

Local rate setting ? Strong areas ability just to ‘relocate’ business away from

weak Business may want more say – accountability issues

Is this localism or simply redistribution of resources

Page 11: W18   lg resource review - cllr houghton

Future Growth in NNDR Expected to exceed current spending plans – will this

solve the problems? Will Treasury take resources Will we just get new responsibilities

Given there is no prospect of RSG to supplement NNDR going forward, this is still likely to be a zero sum game

Winners – strong economies, prosperous places Losers – weak economies, most deprived

Page 12: W18   lg resource review - cllr houghton

Achievability? Current indications no firm proposals to consult

on in July? Recognition that significant issues to overcome Danger of rushing through to meet deadlines Need consideration of alternative models to

incentives without impacts on services Should be a delay

to deliver a sustainable model to achieve buy in to maintain fairness

If these can’t be achieved Maintain status quo Look at other options