Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Memorandum by County Councils Network (LGB 33)


  1.  The County Councils Network (CCN) is a Special Interest Group within the Local Government Association (LGA), with all 35 English Shire Counties in membership. The Network exists to promote the voice of our members within the LGA and the values and interests of the English Counties. Together these authorities represent 47 per cent. of the population of England and provide services across 84 per cent. of its land area.

2.  The CCN welcomes this opportunity to submit its views to the Committee and would be happy to follow this up with oral evidence if the Committee so desires. The submission itself addresses each of the key elements of the draft bill upon which the CCN would like to put forwards it views for consideration.


3.  The CCN welcomes the proposals, which should give local authorities additional freedom to borrow for capital purposes where they can demonstrate affordability. However, proposals for the Secretary of State to hold reserve powers to set borrowing limits for all or individual authorities, seem to be at odds with this principle, acting not only to restrict the proposed new freedom but also bringing an uncertainty to the process when local authorities are setting borrowing limits.


4.  The proposals for the Secretary of State to specify that local authorities maintain their reserves at a minimum level would seem to be particularly problematic. Local authorities will have regard to a range of considerations when setting appropriate levels of reserves and it also seems unlikely that any legislation could account for all local authority types and sizes.


5.  The proposal to effectively combine the existing Revenue Support Grant (RSG) and National Non Domestic Rates (NNDR) into a single Formula Grant is strongly opposed by the CCN. We maintain that NNDR is fundamentally a local tax and a combination of the RSG and NNDR elements into a single Formula Grant will remove what little transparency remains in, the system. Separate identification of the NNDR is important particularly in the context of local authorities discussions with the business community.


6.  The introduction of Business Improvement Districts is potentially a useful resource for development of local schemes and priorities, although the appetite for an additional levy amongst local businesses has yet to be established. The CCN would also highlight that it will be important for both County and District level services to be considered in two tier areas.

7.  The CCN would also highlight the potential contradiction between the introduction of Business Improvements Districts on the one hand, and removing the transparency on NNDR with the introduction of Formula Grant, on the other.


8.  The CCN welcomes proposals for rate relief for small businesses and is also encouraged by changes that will allow the Government to make in year contributions towards the cost of hardship relief.


9.  The CCN generally welcomes the proposed changes to Council Tax although the revaluation of property values will undoubtedly lead to some significant regional variations. It is therefore important that the proposed transitional system will allow for changes to be implemented over a number of years.

10.  Steps to remove the last remnants of the Council Tax Benefit Subsidy Limitation Scheme are welcome together with the introduction of a proposal to allow the Secretary of State to vary the number and ratio of council tax bands.

11.  The draft bill indicates that proposals regarding the council tax discounts for second homes and long term empty properties will be incorporated following the outcome of a separate consultation exercise. The CCN is generally supportive of the giving local authorities the discretion to end such discounts, provided that the billing authorities in two tier areas are consulting with the County Councils as part of the decision making process.


  12.  Proposals to allow local authorities to charge for discretionary services and additional powers to trade are welcomed by the CCN although we still have yet to identify services to which this might be applied and the potential impact such charges may have. We would also appose these additional freedoms being linked to performance of individual authorities.


13.  The CCN welcomes the proposals for additional freedoms and flexibilities, although it is evident that there has been a lack of progress in identifying and delivering worthwhile freedoms.

14.  The CCN is opposed to the allocation of local authorities into just four performance categories, particularly if this leads to differential treatment depending upon the classification received.


15.  Changes to give co-opted members of overview and scrutiny committees (other than elected councillors) voting rights may be regarded as a step away from the democratic principles of elected local government representation. The CCN is concerned at the potential precedent this may set.


16.  The CCN is extremely disappointed that there is no provision within this draft bill for returning NNDR to local authority control.

17.  The table below illustrates that levels of council tax increases continue to run well in excess of inflation and the CCN believes this position is unsustainable. Central Government funding accounts for far too big a proportion of local authority financing and as such the impact of shortfalls in central government grant or increases in service costs fall disproportionately on the local council taxpayer.

Illustrative Council Tax Increases

Annual Increase
6.8 per cent
8.3 per cent
2.6 per cent
6.1 per cent
5.2 per cent
2.3 per cent
6.4 per cent
6.3 per cent
1.0 per cent
8.2 per cent
9.3 per cent
2.5 per cent Est

18.  The CCN therefore urges the government to return NNDR to local authority control to restore the balance of funding.

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Prepared 4 September 2002