Richard Harbord: Big reforms should focus on a ‘sustainable’ local government
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Richard Harbord
We are entering an exciting and critical few months for local government. There are so many things going on it is unfortunate that so much time is to be wasted on the Brexit referendum when it would be better spent on the future of local government.
Of course, there are some practical problems. I understand there is only a week between the purdah for the local elections and the purdah for the referendum which gives a very limited window for progress on business rates devolution, as well as other issues.
Indeed politicians are in limbo almost everywhere you look – local elections, police and crime commissioners, Northern Ireland and Welsh assemblies, the Scottish Parliament.
Devolution steering
However, on a more promising note it is good to know that the first meeting of the steering group on business rate devolution took place two weeks ago representing a high quality gathering of senior finance officers.
Sub groups are now in the process of being set up and they will be key in looking at the detail of needs and equalisation as well as other services to be financed from business rates.
Detailed work is needed on the quantum of business rates, along with issues not easy to resolve such as the disposition of the central list, appeals and the uncertainties they create.
The target of consultation completed in the summer is an ambitious one and these groups will have a lot to do to hit that. This is an England thing, of course, as different approaches to business rates devolution are being followed elsewhere in the United Kingdom.
In parallel to this we will also see regulation to effect more frequent valuations and probably some changes to the appeals process. This is of vital importance in local authorities in terms of bringing more certainty to financial outcomes. However, that objective must be balanced with businesses’ right to appeal what for many is a hefty tax.
Pensions and planning
At the same time the 89 local government pension authorities are also facing major change and there is much that is not yet clear, particularly in respect of governance.
There is a July deadline for authorities to confirm which of the major funds they will use. This is a change where it will take time to measure success. It is expected to save a reasonably large sum in investment management fees, but there will also be measures of success in comparative returns.
The other big piece of legislation currently in progress is the Housing and Planning Bill.
This has been given a rough ride in the House of Lords where it is not considered good legislation. This will however have a major effect on local authorities and I am not sure that has been properly quantified as yet.
The legislative equivalent of the elephant in the room, the thing that so desperately needs reform and yet is never mentioned is, of course council tax.
Still meeting around 25% of total expenditure, it is out of date, difficult for the public to understand, and set in an age which no longer exists.
It desperately needs change, even if that were limited to a revaluation so people could understand the figure they are paying on and an extension of the bands to meet the explosion in property values since 1990.
After all, how can it be fair for all properties over £320,000 to be taxed exactly the same? The range in Band H is £320,001 to £70m. There is no logic in it. Even in Wales in 2005 they managed to add an additional band at £424,001 and above.
It is important to ensure that the changes currently being discussed lead to a local government that is sutainable in to the future
Richard Harbord
