Agenda item

Nicola Morton, Head of Local Government Finance, introduced the report which set out the key announcements in the provisional local government finance settlement, as well as the key messages in the LGA’s response to the settlement. Key announcements included an increase in the general council tax referendum limit from 2 per cent to 3 per cent, a forthcoming consultation on options to address the negative revenue support grant, and ten new 100 per cent business rates retention pilots for 2018/19. It had also been announced that 75 per cent business rate retention would be introduced for all councils from April 2020.

The LGA’s response had expressed disappointment that the settlement did not tackle the funding gap which would reach £5.8 billion by 2019/20, and almost no new money had been included. Additional flexibility in setting council tax was welcomed, but new funding was required to protect services from further cutbacks. It was also welcomed that the Government had accepted the LGA’s call not to make further changes to the New Homes Bonus, and that 10 new business rates retention pilots would be established. There remained a concern that the current four year deal would end in March 2020, and there was no clarity over funding levels after this which would impact on councils’ ability to make financial plans.

In the discussion on the report, the following points were raised:

·         There was a growing gap in the availability of capital funding for school expansion meaning that some councils are having to borrow substantial sums to fund essential expansions or new builds, often in academy schools where the council will not even own the property. Funding the borrowing adds to revenue pressures. There is a further issue in relation to schools overspending and a concern that overspends in maintained schools could fall back to councils who would not be in a position to meet the funding gap if schools in their areas overspent. There was also a growing special educational needs and disability (SEND) population in schools who require additional support and funding. Should the Government agree to take more refugee children it may be more difficult to find places to house them as there was currently a lack of clarity on Government funding. It was hoped that the Home Office would publish the grant regime, as the previous Immigration Minister had agreed that this would be done in January 2018.

·         The LGA had been successful in previous years in campaigning for additional funding for adult social care, but there should now be a case made that lack of funding would have a profound impact on the services which were provided to individuals, communities, and other parts of the public sector.

·         It was agreed that there should be certainty and clarity on funding sooner than at the end of the current four year deal period in 2020. This should be in place a year before the four year deal ended.

·         In response to a question on the new system for dealing with business rates appeals, it was noted that it was currently too early in the process to examine if any impact had been made. Early statistics suggested a positive impact, but this would be reviewed in due course.

Decision

The LGA Leadership Board noted the report.