Developments within Local Government Finance Cllr Steve Eling Deputy Leader and Cabinet Member for Strategic Resources
Stuart Kellas Director – Strategic Resources
Melanie Dudley Director - Improvement and Efficiency
Key Developments • Re-Localisation of Business Rates • Housing Revenue Account - Self Financing Model • Localising Support for Council Tax • Public Health Transfer
Re-Localisation of Business Rates • Proposal – to cease the current system of pooling and national redistribution of business rates income in favour of local authorities retaining the income collected in their area.
• Proposed Implementation Date – consultation ends 24th October 2011. Implementation April 2013.
• Key Impact – potential to disadvantage the most deprived communities with low business tax bases
Re-Localisation of Business Rates Key Government Drivers • Localism agenda • Link between success of local businesses and local authority finances. Risks To Sandwell • Heavy reliance on formula grant funding • Weaker tax base than other authorities
Housing Revenue Account (HRA) Self Financing Proposals • Proposal – to replace the current HRA subsidy system with a self-supporting system under which there is no ongoing support from central government • Implementation Date – 1st April 2012 • Key Impact – debt liability levels will be adjusted so that authorities will have an increase or decrease in their debt
Housing Revenue Account (HRA) Self Financing Proposals Key Government Drivers • Localism agenda • The present subsidy system determines the financial levels of support one year ahead only, this does not enable longer term financial planning Risks To Sandwell • Additional HRA debt liability/ reduced ability to fund capital projects
Localising Support For Council Tax • Proposal - to localise support for Council Tax but more significantly to reduce the level of overall expenditure by 10%
• Proposed Implementation Date – consultation ends 14th October 2011. Implementation April 2013
• Key Impact – potential to disadvantage the most deprived communities who are reliant on such support.
Localising Support For Council Tax Key Government Drivers • Welfare Reform Bill – contained provision to abolish the current benefit system and allow local schemes to be developed • Localism agenda - Reinforcement of local control over Council Tax Risks To Sandwell • High reliance on support. Protection of pensioners and vulnerable groups will mean that the overall saving of 10% will need to be found from the remaining claimants
Public Health Transfer • Proposal – to transfer public health responsibilities currently undertaken by Primary Care Trusts and Strategic Health Authorities to Local Authorities. • Implementation Date – 1st April 2013 • Key Impact - Introduction of a ‘payment by results system’
Public Health Transfer Key Government Drivers • Move away from centralised, top down approach. • To provide local government and local communities with the freedom to decide actions locally
Risks To Sandwell • The ‘payment by results’ system has the potential to disadvantage the most deprived communities who have different starting points on their journey to better health and wellbeing.
Key messages • Local Government Finance is facing a significant period of reform at a time of unprecedented economic uncertainty • Challenging implications of the proposals – the full extent of which cannot yet be quantified.
What next?