What do city council treasurers think about council funding?

LGiU partnered with Core Cities and London Councils to host a roundtable discussion on local government finance. Held on 15th January, we welcomed 10 Chief Finance Officers of councils in Core Cities and London Boroughs to hear their views on the current financial situation and what we should be doing as a sector to move the conversation forward. 

Introductions

Paul Honeyben from London Councils welcomed delegates saying councils in London are about a third worse off due to austerity and debates about fair funding continued in the lead up to Spending Review. We need to look beyond the immediate pressures towards medium term sustainability.

Chris Murray from Core Cities UK added that there was a long way to go in terms of getting Government to understand our position. This was particularly apparent during conversations with Civil Servants about the Industrial Strategy. He also mentioned that Core Cities UK’s Cultural Cities Enquiry would call for a Tourism Levy in a soon-to-be-published report.

Jonathan Carr-West from LGIU then introduced the event. He said Local Government faced a ‘perfect storm’ of uncertainty in 2019 because of the fair funding review, business rate retention and comprehensive spending review. There was agreement from our previous round table that although business rates and council tax are imperfect, they can be made to make work. Property taxes appear to be a simple and generally accepted method of local taxation.

Social care must be at the centre of plans for the future. If it is the key problem, what structures do we need to put in place to gain financial sustainability. He asked what delegates would they tell Government over the next six months and what in an ‘ideal world’ would be in the spending review.

Key Discussion Points:

  • The lack of ability to plan was raised. Multi year budgets were seen by some as an easy ask. Government also had a habit of changing its mind on existing policies, hampering planning further.
  • Some delegates felt that Local Government did not speak with one voice and has not countered the view of some in Government that councils are inefficient.
  • Reform was needed, but there was not national political will. For example, Council tax bandings go back to 1991 and the future of business rates continued to be unclear.
  • Delegates contrasted Local Government’s ‘brand’ with that of the NHS. There is little public outrage about cuts to council funding, but politicians and public are very sensitive to changes in health service budgets.
  • Despite Brexit the Government has managed to publish long term NHS plan – why can’t it do the same for local government?
  • Delegates agreed that it was hard for local government to match the status of the NHS because it has an enforcement role and takes unpopular decisions. The NHS also benefits from being responsible to only one Government department.
  • It was felt we should focus our public message on the things we do that people like and focus the message to central government on problem solving and local delivery.
  • Delegates agreed central Government was distracted and running to full capacity. There was little legislative space and no room to even commit to meetings.
  • It was felt we needed to more clearly articulate the difference Local Government makes and explain the value of the interventions.
  • There has not been widespread revolt over the Social Care Precept and politically this has not proved too difficult at either a local or national level.
  • A number of delegates reported that city and borough populations appeared to be moving to a more ‘transactional’ relationship with Government and Local Government.
  • Younger people accepted that they needed to pay for services they used, but were less convinced of the arguments around universal delivery. We need to factor this in when thinking about local government in the medium to long-term.
  • Local Government also needed to stress its role as a shaper of places and a place where local accountability lives.
  • Questions were raised about how aware the public were of the budget constraint and whether any research had been done. It was noted that a number of authorities had used budget calculator tools – where the public would choose priorities and spending – during their finance consultations.
  • Local Government has reached the point where it is difficult to argue that more money is not needed but it has a generally poor ‘brand’ within the public and lacks a self-confident, simple description of its aims and values.
  • Questions were asked about the success of the Manchester Model which has seen the devolution of NHS spending to a Combined Authority geography. There is a danger of local government getting ‘lost’ in the new regionalisation of NHS.
  • Social care, both adults and children’s, was the biggest threat to financial viability. Some politicians are now lobbying for a nationalised solutions but this would not take account of local differences. The LGA’s green paper on social care has come up with some viable options, one of which was a headline increase in national insurance.
  • One solution may be a joint funding formula for NHS and social care which would then be divided up fairly between local places.
  • Community based care did not enjoy the same public and political profiles as hospital based care. A lot of social care is a lot more cost effective, but does not get national recognition.
  • There was also a feeling that the NHS is moving away from intervention work thanks to deficits in local NHS trusts.
  • It was felt that Social Care needed to retain a local aspect, raising question about whether the way in which funding currently flows supports us to have a place making approach.
  • A UK city with quite a buoyant economy could go bust if it made the wrong choices and there are lessons in that. Places do not have the economic freedoms they need. We need more decentralisation.
  • Delegates were asked whether we need to think about spreading the funding that we need across a broader range of taxes. Local taxation sends a message to citizens about citizenship. Fees, which are a key source of revenue, do not send the same message and are often perceived in a negative way.
  • It was agreed, that any case for further devolution of finance would need the support of local people. Delegates agreed this was a ‘key moment’ for the sector, with widespread acceptance across local government that funding models needed change.
  • Fair Funding Review risked distracting us from the basics and raised the possibility of further division. Austerity in other areas, for example in education, police and welfare is now impacting on local government.
  • It can appear local government is permanently in a review and responding to Government. We need people like LGIU and LGA to come together around three or four key asks or mantras that will guarantee sustainability over the short, medium and longer term.

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