Written evidence submitted by the Local
Government Association
The Local Government Association represents authorities
in England and Wales promoting the interests of around 500 authorities
which represent around 50 million people and spend around £74
billion a year on local services.
The LGA supports a locally led approach to regeneration
with decisions taken by democratically accountable local councils
working with residents, local businesses, the voluntary sector
and social enterprises to promote economic growth and a high quality
of life locally.
The LGA campaigned for the decisions about economic
regeneration to be taken at the level of real economic geography
and welcomed the government's policy on local enterprise partnerships.
Local economies vary significantly across a wide range of economic
indicators and local decision-making allows policies to be targeted
to local need in accordance with local priorities.
To successfully create the conditions for local economic
growth though, it is crucial that local enterprise partnerships
and local councils have the tools to be able to promote it.
The Communities and Local Government paper Regeneration
to enable growth - what the government is doing to support community-led
regeneration catalogues the way in government policy supports
local economic growth.
Some of the key policies will be considered as part
of the Local Government Resource Review, others are in the process
of being legislated for and some are being implemented.
The way in which these policies are taken forward,
and the pace with which they are implemented, will be central
to the success with which local government working with their
local communities can help promote local economic growth.
In our response below, with more detail on some points
in Annex A, we set out the principal ways in which the menu of
tools and resources from which local places can draw on could
be strengthened and how policies to improve people's employability
and skills could be more tailored to the needs of local people
and the local economy.
THE LGA WOULD
LIKE TO
SEE
The re-localisation of business rates
In the Local Growth White Paper, and the Local Government
Resource Review's terms of reference the government announced
that it was committed to examining ideas for retaining business
rates, whilst ensuring that all authorities have adequate resources
to meet the needs of their communities. Currently all business
rates are collected and paid into a central pool and then redistributed
as part of formula grant. A re-localised model would see councils
retain the majority of this and create a direct incentive to promote
growth. There would however still be a need for any system to
take account of the differing levels of need amongst different
authorities.
Tax Increment Financing (TIF)
Implemented quickly giving councils the power to
borrow against the revenue from local developments, incentivising
development and growth. It is particularly important given that
the reductions in the public budgets available for regeneration
will take effect from the next financial year that we do not lose
momentum on regeneration and that the new tools available locally
are brought forward as quickly as possible.
A transfer of assets from the previous arrangements
for regeneration held by Regional Development Agencies to local
councils. It is important that the transfer of Regional Development
Agencies' assets takes account of the wider taxpayer interest
(including council taxpayers) and the important role those assets
can play in current and future regeneration projects. Councils
are being asked to pay full market value for RDA assets - this
payment transfers funds from the council taxpayer to the Exchequer.
A fair approach to the local taxpayer would recognise that the
transfer of an asset from an RDA to a council is in fact neutral
to the public sector balance sheet, and should not therefore require
a charge on council taxpayers.
Democratically accountable local councils taking
the decisions about the Community Infrastructure Levy balancing
the wider concerns, interests and needs of the local community
(see Annex A for detail);
The remaining European Regional Development Fund
delivered in a stable and locally-responsive way, enabling
councils and local enterprise partnerships to shape programmes
and projects to fit with local need. Commitments to invest the
remaining ERDF are welcome, but it is important Government ensure
sufficient match-funding is available to draw it down. Looking
ahead, it is important to begin designing altogether more joined-up,
locally responsive set of European programmes for 2014-20.
A new homes bonus which could stimulate house building
and offer significant financial benefits to local neighbourhoods
is welcome. However this must incentivise the right kind of housing
where it is needed. Technical concerns about the detail of the
proposal are outlined in Annex A.
ON THE
GOVERNMENT'S
WELFARE REFORMS
The decision about who provides the Work Programme
are being taken by the Department of Work and Pensions, and the
decisions about the employment support available to local people
will be taken by the providers. It is not yet clear how providers
will work with local enterprise partnerships, or how local government
can work alongside providers, and hold them to account. Given
that providers will have considerable discretion about the employment
support services they offer - the "black box" - and
the importance of the services they offer to local regeneration,
it is important that local enterprise partnerships and councils
have a role in the commissioning and performance management of
the providers. This will bring together the local work to promote
job growth with the support to help people into jobs.
The introduction of the Universal Credit is
an opportunity to help people see work as more financially attractive.
But many people will require personal help with their claim; help
to see how it improves their financial position and wider support
to move back into employment. Face-to-face help will be critical
to the success with which universal credit achieves its policy
objective to improve work incentives. There is a strong case for
taking the decision about this support locally allowing the service
to be accessible, trusted and integrated alongside other local
public services.
Councils fully support the principle that planning
decisions should be based around the needs and aspirations
of local people and there are many examples of this taking place
effectively locally, with councils working across areas to plan
growth strategically. Greater freedom and flexibility for councils
to be able to work together to plan strategically for growth,
without top down targets and strategies is welcome. We would question
the need for central government to issue guidance to councils
and their partners at the local level on how to co-operate in
relation to the planning of sustainable development.
Decisions taken in the Spending Review have reduced
the budgets for economic regeneration, and the cumulative size
of bids to the Regional Growth Fund illustrates the needs for
the resource with which to take forward regeneration programmes.
Against that background, it is important that the government provide
alternative financial mechanisms with which local councils, local
enterprise partnerships and other local partners can help drive
up local economic growth.
Annex A
COMMUNITY INFRASTRUCTURE
LEVY
Supporting the development and growth of local areas
is about balancing spatial planning decisions with appropriate
capital investment to support the right combination of infrastructure.
It is important to ensure that development brings real and visible
changes for local people. Such important decisions are best taken
by democratically elected councils and groups of councils working
together to plan effectively for the needs of their areas.
LGA research demonstrates the important role that
appropriate investment in infrastructure plays in encouraging
growth and development locally. Over half of Councillors surveyed
by the LGA felt that felt residents would be supportive of development
if it brings improvement to the local area and local services
and nearly half (47 per cent) of respondents thought residents
would be supportive of housing development if there is the infrastructure
required to support new housing and populations.
Community Infrastructure Levy is important as part
of a wider package of measures designed to stimulate local growth
and we welcome the proposed removal of some unnecessary national
controls and complexity. Decisions on how CIL is spent locally
should be taken by democratically accountable local politicians,
subject to the safeguard of independent examination. While we
support local people having more power to influence decisions
in their areas, it is important that key infrastructure decisions,
which will affect people outside of one local area, are taken
by accountable representatives who can take into account wider
concerns and needs across the region.
NEW HOMES
BONUS
Councils recognise the important role development
plays in stimulating local growth and sustainability. Research
conducted by the LGA demonstrates that councillors are overwhelmingly
in favour of appropriate development locally. 80% of councillors
surveyed agreed that their local authority area needed more housing
and almost 50% agreed that more housing was required in their
ward and over 50% agreed that they were in favour of housing development
in their ward area.
Housing is a vital part of the local economy and
the proposal to establish a new homes bonus which could work to
stimulate house building and offer significant financial benefits
to local neighbourhoods is welcomed. However, it will be important
to ensure that the scheme incentivises the right kind of housing
where it is needed. In some areas this might involve reinvesting
in blighted neighbourhoods as well as building new housing in
areas of high demand. We note that the suggestion for the net
increase in the council tax element of the bonus to make some
allowance for demolitions has not been taken into consideration
by the government in their final scheme design. This will have
implications on councils who for very good housing strategy reasons
have to replace significant parts of their housing stock.
We are pleased with the confirmation that the affordable
housing enhancement will look at the gross change and act as an
incentive in areas where regenerations schemes include the provision
of affordable housing definition. However, as noted above, the
issue remains for regeneration and redevelopment schemes that
do not include affordable housing. These schemes will be more
difficult to bring forward without any grant funding. The New
Homes Bonus will be paid based on increases in effective stock.
Following year one of the programme (which will be
funded by £200 million from DCLG) the funding for the bonus
will be derived from top slicing formula grant. More grant-dependent
authorities will have to build more homes to make sure they get
more New Homes Bonus to reverse the losses from the formula grant
top slice.
STRATEGIC PLANNING
Councils fully support the principle that planning
decisions should be based around the needs and aspirations of
local people and there are many examples of this taking place
effectively locally. Elected councils, both individually and across
wider areas, play a central role in ensuring that democratic and
representative decision making balances the interests of, and
considers the impact on, all sections of the community.
Clause 90 of the localism bill provides a new duty
to cooperate in relation to the planning of sustainable development.
This places a duty on local planning authorities and other bodies
as prescribed to cooperate with each other in the preparation
of development plan documents, other local development documents
and other activities that support the planning of development.
Councils are already working together across areas to plan strategically
for growth. They do this not because of a duty or centrally imposed
requirement but because councillors recognise the pressing needs
of their areas are willing to work together to tackle joint priorities.
Defining in Whitehall what is meant by cooperation,
in what circumstances it is appropriate to cooperate and how to
cooperate is inappropriate and is not our understanding of localism.
March 2011
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