Agenda item

Cllr Sharon Taylor, Vice-Chair and Spending Review Lead for the Resources Portfolio, introduced the report which highlighted the implications for local government of the Spending Review and Autumn Statement 2015. She particularly drew attention to the 24% reduction in real terms in core funding for local government, comprising business rates and revenue support grant. The additional £1.5 billion in the ring-fenced Better Care Fund by 2020 and the consultation on reforms to the New Homes Bonus as well as the flexibility for some Councils to raise Council Tax by up to 3.99%.

In the discussion which followed Members made a number of comments including:

·         The LGA had received good media coverage on the day of the Spending Review and Autumn Statement, and a press briefing by Cllr David Simmonds and Cllr Sharon Taylor the following day had led to further measured coverage in the weekend press. The LGA had received positive feedback from member councils on the response and media coverage. 

·         Although the Spending Review was not as tough as the worst forecasts, there would continue to be substantial financial challenges for local government in the coming five years, following five years of previous funding reductions. There was an assumption from government that councils could use reserves to ‘smooth’ funding reductions, although some authorities had limited reserves.

·         The LGA had made a strong case to DCLG and the Treasury on the need for funding to house and care for Syrian refugees, and as a result the government understood the requirements of local government. There were still concerns about the availability of housing.

·         The LGA would need to work with government on the distributive aspects of the settlement. The flexibility for authorities with Adult Social Care responsibilities to increase council tax by a further 2% was welcomed, but geographically some areas would benefit more than others from this and  there is already pressure on the cost of beds and domiciliary care. All councils faced challenges with an increasing older population. The LGA should consider the issues of redistribution to help areas with higher levels of deprivation so that inequality was not locked into the system.

·         The announcement that councils could keep 100% of business rates, and the reform of the New Homes Bonus were welcomed. The LGA would continue to work with government on the detail of the localisation of business rates and would respond to the New Homes Bonus consultation.

·         There would be a transitional period into the new national funding formula for school, high needs and early years which would be introduced from 2017/18. This would be challenging for some areas and individual schools, and authorities would have to manage the transition carefully at local level.

·         Homelessness and provision of temporary accommodation were placing extensive costs on local authorities, but also high social costs. Private rental evictions have increased . There was more work to do with the government on this issue.

Decision

The LGA Executive noted the update.

Actions

Comments from members to provide a steer for the LGA response to the local government finance settlement, expected to be announced the following week, and further work on local government finance.