The changes introduced by this year's Autumn Statement may amount to the biggest shake up of UK local authority finances in 35 years. Last week we examined the possible effect of council tax increases on both local government and vulnerable communities, but what else is in store?
The good news
The government appears to have listened to councils' requests for greater autonomy, and has committed to fiscal devolution in certain areas. Local authorities will be allowed to keep 100% of business rates income, and will be granted power to use capital receipts from the sale of public assets, such as shops and pubs, to reinvest in local services. A small rise in investment in the Better Care Fund was also announced, meaning that local authorities may be able to access an additional £1.5 billion by 2019/20.
The bad news
While the chancellor's suggestion that councils should sell off an estimated £225 billion of assets to make up for the spending shortfall may seem like common sense, it's worth bearing in mind that these assets can be sold only once. Senior officials are warning that this fire sale approach is an inefficient short term solution to the funding crisis, and calls for councils to make use of their reserve funds suffer from the same flaw.
Frances O'Grady, General Secretary of the Trades Union Congress, has also warned that "regional inequalities will get wider" as a result of business rate changes. Councils in disadvantaged areas may struggle to attract sufficient business investment, while already affluent areas are likely to reap rewards they don't desperately need.
New powers, new dependencies
The most troubling change for local authorities comes in the form of a 56% reduction to the local government central grant by 2020, amounting to a loss of some £18 billion. This change will force councils to rely on business rates and council tax as their main sources of finance, and will make it absolutely essential that not a single penny is wasted.
Enforcement agents such as Dukes Bailiffs can aid councils by creating realistic, sustainable payment plans that minimise debt write-off. If you work for an unfortunate local authority that's set to be under more pressure than ever, contact Dukes Bailiffs to discuss how our ethical services can help.