Minister warned against meaningless local government finance review
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The chief executive of the Chartered Institute of Public Finance and Accountancy has written to the new local government secretary not to review local government finance “unless you mean it”.
Robert Jenrick was last month appointed to become secretary of state for housing, communities and local government in Boris Johnson’s first cabinet as prime minister.
In a letter to the new cabinet minister, CIPFA chief executive Rob Whiteman warned that the sector did not need another review that gathers dust.
He said: “Please don’t review local government finance unless you mean it. The sector has seen reviews aplenty over the decades that were never implemented.”
Despite his plea, Whiteman said the case for reform of local government finance is compelling, because in the long run, councils will not have enough money from business rates and council tax income to meet social care pressures.
He said: “If you take the view that the potential of areas in England should be unleashed with devolved powers on education, skills, health, welfare, housing, criminal justice, infrastructure and the environment, then the finance system will need more radical reform and wider tax-raising powers linked to reorganisation where needed.
2nd Housing & Regeneration Finance Summit
County Hall, October 31st, 2019
Whiteman added that Jenrick should read the 1976 report by Sir Frank Layfield into local government finance, which he said “has not been bettered”.
“The question posed to government was: what is the function of local government? Decide this and the form of finance is easier to determine.”
In his letter, Whiteman also said that the Fair Funding Review should be delayed until the amount of money available to local government is decided under the next comprehensive spending review.
“And if you succeed,” he said, “as we hope you do, in securing funds from the Treasury, please avoid strings that limit usefulness.
“We welcome the reduction in ring-fencing and argue that there is further to go, for example with parking income.”
Whiteman, a former Whitehall civil servant, also repeated his call for the government to remove the Fair Funding Review from ministerial control.
He said: “We favour the creation of an independent, non-political body that would take over the distribution of funding to local authorities, within a policy framework that governments can publicly alter.”
He told the Housing, Communities and Local Government Committee: “In my career on the whole I have seen generally Labour governments redistribute to Labour councils and Conservative governments redistribute to Conservative councils.
“There are various technical arguments made for doing that but at some point I would like to see an independent body considering the drivers and the data used and the evidence and in a transparent way advising government how a fair funding formula could be achieved.”
Whiteman also welcome the Redmond Review of the local audit and reporting landscape announced at CIPFA’s annual conference last month, although he said it should be extended to cover health bodies.
Whiteman said: “The sector is at its best when given independent professional challenge.
“The firms have long been a training ground for specialist local government financial skills. We must maintain a pipeline of future finance leaders alongside the many similar workforce pressure that councils face.”
Shortly after Boris Johnson became prime minister, the chairman of the Local Government Association wrote to him to request he introduces a new local government finance act.
This week, concern was raised in the sector that Jenrick has been excluded from the government’s Brexit operations committee.
