Memorandum by County Councils Network
(LGB 33)
INTRODUCTION
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.
CAPITAL FINANCE
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.
FINANCIAL ADMINISTRATION
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.
FORMULA GRANT
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.
BUSINESS IMPROVEMENT
DISTRICTS
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.
NATIONAL NON-DOMESTIC
RATES
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.
COUNCIL TAX
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.
CHARGING AND
TRADING
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.
PERFORMANCE CATEGORIES
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.
VOTING RIGHTS
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.
BALANCE OF
FUNDING
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
| |
| Year | All
| Counties | Inflation
|
| 1999/2000 | 6.8 per cent
| 8.3 per cent | 2.6 per cent
|
| 2000/2001 | 6.1 per cent
| 5.2 per cent | 2.3 per cent
|
| 2001/2002 | 6.4 per cent
| 6.3 per cent | 1.0 per cent
|
| 2002/2003 | 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.
| 
