Now that the dust has settled after the General Election and we have at least some prospect of a “strong and stable” government, what can local government wish for in 2020?
Firstly, a quick announcement of the draft Local Government Finance Settlement in early January with a no-worse-than-last-year commitment would help budget planning. This will then be followed by a new, longer-term stable arrangement later in the year which will need to reflect the new reality after the election and, ideally, include less reliance on business rates, a tax in real need of reform.
It will also need to include real growth in funding to enable councils to do their bit to unlock Britain’s potential. A return to 2010 levels of funding is unrealistic but increases are needed to ensure that the vulnerable are protected. The government needs to be serious about ending austerity whilst still maintaining strong finances.
3rd LATIF NORTH
March 25th, 2020, Manchester
Council treasury investment & borrowing
Housing
Secondly, if the government is serious about building 300,000 new homes a year by the end of its term of office, it needs to empower councils financially to build their own low-cost housing rather than rely on the crumbs from developers’ tables.
Contributions from the private sector alone will not achieve the 300,000; historically, volume-built council housing has only come from direct government intervention through subsidies.
The current grant levels, particularly in London and the South East, are too low. The recent increase in PWLB rates also impacts on the ability of councils to fund more marginal schemes—particularly in inner cities that have high levels of leaseholders—which increase the costs of site acquisition.
A move to funding new council-supported housing at infrastructure rates is required, backed by grants. Over time, taking into account the assets created, the benefit to the public good would outweigh any borrowing costs.
Adult social care
Thirdly, the reaching of some form of agreed consensus on adult social care: This is the highest area of spending in top-tier and unitary councils, and the continued application of a combination of sticking plasters from grants and increased council tax is not sustainable.
There needs to be a solution that enables care to be delivered equitably, across the country, without placing undue stress on local communities through tax rises or individuals. A national system requires a national solution, even if locally delivered. A sensible solution that provides adequate social care capacity may even reduce pressures elsewhere in the NHS by reducing bed blocking.
LGPS pooling
Fourthly, a sensible discussion on the role of pooling in the LGPS. I understand that the 2019 valuations to be published in early 2020 will reveal the majority of funds in a better funded situation than three years earlier.
This, I suspect, is based upon funding decisions which pre-date the move to mandatory pooling. The move to mandatory pooling on the current basis is still not proven. It may be an outdated view, but there has to be something to be said for local tax payers’ representatives (i.e. councillors), properly advised, having the final say on where those funds are invested rather than forcibly handing them over to a largely unaccountable third party who then charges extra for the benefit of doing the same job.
A move to voluntary pooling for high-performing funds would be welcome but is unlikely to be high on the government’s list of priorities.
What are the chances of all or some of the above happening? Well, one can live in hope. The early rhetoric from the government is promising but actions speak much louder than words, and so we’ll have to wait and see if any of the above wish list will be fulfilled.
Whatever happens, 2020 will be interesting.
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