News Roundup: Smith Commission, Welsh mergers, Kerslake defence, Barnett formula…
0Smith Commission spark English demands
Proposals for devolution of tax raising powers to Scotland should be used as a blueprint for a new settlement for English councils, according to the Local Government Association. Local Government Association chairman, David Sparks, speaking after the publication of the Smith Commission report recommending devolved powers for Scotland, repeated his call for a constitutional convention to discuss devolution in England. Last week, prime minister David Cameron ruled out new tax raising powers for the English cities and regions.
Huge cost identified for Welsh council mergers
The cost of local government mergers in Wales could total up to £268m, but would only result in savings of £65m during the first three years, according to a new analysis. The Welsh branch of the Chartered Institute of Public Finance and Accountancy produced its findings on behalf of Welsh Local Government Association, SOLACE Wales and the Society of Welsh Treasurers. It found significant costs were likely to accrue from people change costs, including redundancy, of up to £158m; property, systems and other change management costs of around £54m and income lost due to council tax harmonisation of at least £57m.
Kerslake fends off funding criticisism
DCLG permanent secretary Sir Bob Kerslake has defended the government from criticism that it doesn’t know what level of funding councils need to maintain services. Kerslake was questioned by a parliamentary Public Accounts Committee chair Margaret Hodge, who asked: “If you don’t understand what absolute level of funding is sufficient to provide services, how can you know that the department’s decisions about the level of funding are right?” In response, Kerslake said: “It’s almost impossible for us to reach a precise view about exactly the level of funding each local authority needs. Local authorities provide a mix of services, many of which are for them to decide on the level of service they provide and how. So forming a view on what’s the right amount is very difficult and indeed impossible.”
CIPFA calls for phasing out of Barnett formula
The Chartered Institute of Public Finance and Accountancy has called for the Barnett formula to be replaced because it is “no longer fit-for purpose. The call comes after the Smith Commission published its recommendations on devolving powers to Scotland which include increased tax powers for the Scottish Parliament but which assumes the retention of the Barnett formula in its current state. Rob Whiteman, Chief Executive of CIPFA, said: “With the significant increase in tax raising and spending powers in Scotland we must accept that if we are to see transparent and sustainable funding for all parts of the UK the formula will need replacement.”
PWLB borrowing ‘could increase transformation’
Councils should have access to a new £5bn fund aimed at coordinating funding for public service transformation, according to a government-commissioned panel. The independent Service Transformation Challenge Panel said that £400m could come from central government, with local authorities contributing £400m through Public Loan Works Board borrowing. Another £200m could be raised by councils through the sale of surplus property, it claimed.
