Finance bulletin

Welcome to June’s finance bulletin.

Following May’s local government elections, Cllr Claire Kober stepped down as Resources Board Chair. I would like to take this opportunity to thank her for all her hard work and her commitment to the Board and the LGA. I would also like to thank Cllr John Fuller who stepped in as Chair of the Resources Board in the interim. This month, I became the new Chair of the Resources Board after previously being Chair of the Children and Young People Board. I look forward to working with you at such a key time for local government finance as we approach the 2019 Spending Review, implementing greater business rates retention and new funding baselines as part of the Fair Funding Review. It has never been so busy in local government finance.

Despite not knowing the timetable for the 2019 Spending Review, the LGA’s work on this is already underway. This month the LGA’s Leadership Board and Executive discussed the key messages the LGA will use in our 2019 Spending Review campaign. Our public facing campaign on this kicks off with the publication of our new funding gap analysis which we have extended to 2025. We will publish this at our annual conference next month. Please look out for this in early July. We have also started some work demonstrating how efficient local government is and we will be focussing on the positive impact of local government services on residents and other parts of the public sector. We are also looking at variation in spend on local government services and have recently published a report on the factors driving variation of spend on children’s services.

On Business Rates Retention, we have been encouraging councils to respond to an MHCLG paper, published last month. This includes options for dealing with the financial risk of business rates appeals. MHCLG believe centralising the impact of appeals is complex and they will need to take into account the recommendations of the Andrew Hudson Review (the independent review of MHCLG's governance of the business rates system) once it is complete. Recent statistics from the VOA show that are still more than 130,000 outstanding appeals from the 2010 list. As appeals are the biggest risk in the business rates retention system there has to be a better way to deal with appeals than letting them fall on local government and we will be responding to the paper along those lines. I encourage you to do the same.

In addition to our work with the government and member authorities on the Fair Funding Review, our own work programme on the review continues. We commissioned two models to help us, and our member authorities, assess the impact on individual local authorities of various options emerging from the Fair Funding Review. It will also be possible to develop your own set of formulae. Our needs formulae model and council tax equalisation model will be available to member authorities shortly.

We are also about to start commissioning some work on transition which will allow us to explore the impact of different ways of dealing with transition from one system to the next. And we are about to appoint a supplier to produce a business rates retention model. This will allow us, and member authorities, to assess the impact of various design choices on individual local authorities such as levels of the safety net and levy, tier splits, and the length of time between resets. We hope to be able to make these available to you in the Autumn when we are expecting a MHCLG consultation on these issues.