Q&A: Rob Whiteman, CIPFA chief executive on the Spending Review
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Rob Whiteman, chief executive, CIPFA
Room 151 asks Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy whether George Osborne’s Spending Review figures add up for local government.
R151: The Treasury says that cuts to revenue support grant will be more than compensated for by the devolution of business rates and increases in council tax levels. Do you think it has got its sums right?
Rob Whiteman: My view on the maths is it is not possible to be certain until we get the local government finance settlement, which is due in the week before Christmas. I don’t think you can prove what DCLG is saying just from the Spending Review figures. Conversely, I don’t think you can prove at the other end what the Local Government Association is saying. I imagine we will come down somewhere between the two. Everyone is asking us this question but I would rather wait and say something that is credible than make headline-grabbing guesses.
Clearly some assumptions have been made about council tax and business rates and social care precepts. Until we see a bit more about how they will work then I don’t think we can say if the modelling is correct. We will also understand a bit more arithmetic about where the better care fund came from. £800m of it is arguably paid for from the £800m savings on the New Homes Bonus – which means it is £700m additional money rather than the £1.5bn announced.
R151: Even if the Treasury is right, what concerns are there over business rates retention?
RW: What we will be looking out for are signals on how retained rate equalisation will work. Will it be on a national basis or a regional basis? I think, more likely, on a regional basis given the basis of travel.
I think the other interesting thing will be to what degree might the government ask the sector help with the design of what any new arrangements might look like. The way it traditionally works is everyone makes their submissions and the government makes a decision on how to shape things. Bearing in mind the current process with Local Government Pension Schemes pooling, it wouldn’t surprise me if they ask for the sector’s help.
R151: How do you think the withdrawal of RSG will dovetail with the implementation of business rates retention?
RW: If the two don’t dovetail then the net losers under the new arrangements will be hit even harder than they would otherwise. It is easy to wind down the RSG but it is more tricky to ensure business rates retention is introduced gradually in a way that will compensate. Then you have to take into account the rest of the public exchequer. What if the spending crisis in the NHS gets worse or forecast tax receipts are lower than expected? Then the chancellor might decide he can’t dovetail the two. We would be safer if they get on and work up how the arrangements will work to give certainty and transparency.
R151: Do you support the proposal to give councils the right to use capital receipts for revenue spending?
RW: I think public bodies including local authorities generally have buoyant balance sheets. We would encourage the sale of assets, but receipts should be used in line with good business plans. I would worry if people think asset sales are going to compensate for revenue spending in the long term.
