w18 lg resource review - cllr houghton
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Potential Implications of Current Resource Review
Cllr Steve HoughtonLeader Barnsley MBC
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
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
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
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’
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
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
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!
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
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
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
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