independent commission on local government finance eamon lally cipfa north west annual conference 14...
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Independent Commission on Local Government FinanceEamon Lally
CIPFA North West Annual Conference 14 November 2014
The Commission
Terms of Reference• Identify the strengths and weaknesses of
the local government finance system,
• Bring forward practical options for reform in the next Parliament and
• Develop and test those proposals against the key challenges facing the country – growth, housing supply, effective welfare provision, affordable health and social care, and early support to families and children.
Timetable from here: 30 Oct: interim report publishedNov-Dec: Engagement on Interim findingsFeb 2015: Final report
Context: National tax and spend
Context: The path of future revenue funding – not including schools
2010/11
2011/12
2012/13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
-£10,000,000
£0
£10,000,000
£20,000,000
£30,000,000
£40,000,000
£50,000,000
£60,000,000
Additional Social Care fundingChange in reservesInvestment incomePublic Health allocationOther grantsFormula GrantRSGRetained Business RatesCouncil tax
£bill
ion
The localisation of council tax support in April 2013 re-duced the taxbase
• Total funding projected to fall to £43.4 billion by 2019/20
• This includes £3.1 billion of Public Health funding which carries with it a new responsibility
• All figures are in cash terms
• In 2013/14, 38% of total funding is from council tax, 19% from retained business rates, and 28% from RSG
Negative reserves figures when councils underspend and contribute to reserves
Public health funding not new money as it comes with a new burden
4Source: LGA's Future Funding Outlook 2014 - outturn data to 2012/13, budget data 2013/14. 2014/15 and 2015/16 based on settlement, 2016/17-2019/20 from LGA projections
The Commission’s vision
The local government finance system should:
• Promote self-reliance and self-sufficiency• Encourage entrepreneurialism and innovation• Promote local decision-making on service
delivery• Transparency• Maintain support for the most vulnerable
What the Commission has said it agrees with
• Self-sufficiency• Greater freedom over council tax, including
bands, rate, and discounts• 100 per cent retention of business rates• Devolution of skills and welfare to work
funding• More integration of decision-making across
local public services
6
Pace and Scope of Change?
• Variable speed reform?• Self-sufficiency over all local public services?• New incentives?• A new approach to equalisation?• Integrated services?• Bold approaches to housing supply problems?
Self-sufficiency?
Self-sufficiency at a sub-national level
Equalisation
• Not all Councils can grow economically at the same pace
• Not all Councils will grow their populations at the same pace
• Councils will face different Levels of demand
Challenges and questions
• What is the appetite for radical change?• Is there evidence that integrating health and
social care services will create savings? • What incentives are needed if any?• What should the balance be between
incentives and equalisation in the system as it moves towards self-sufficiency?
• How would it work – the wiring diagram?
Independent Commission on Local government Financeenquiries@localfinancecommission.orgContact Eamon Lally: Tel: 07799768570
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