UK Prime Minister David Cameron recently announced plans to transform some of the country’s worst housing estates. The intention is to root out entrenched poverty and crime, and build a greater number of affordable homes. How will this regeneration be funded, and who stands to benefit?
The Convention of Scottish Local Authorities (COSLA) has published calls for a raft of new taxation powers in its submission to the Commission on Local Tax Reform. The organisation, which represents most of Scotland’s 32 councils, agreed on the submission during COSLA’s summer convention.
Addressing fiscal deficit
One of COSLA’s core arguments is that “effective local tax reform is key to addressing Scotland’s local fiscal deficit”. In particular, the group advocates wide-ranging council tax reform. This would involve removing the council tax freeze introduced by the SNP in 2008, which has cost a cumulative £2.5bn.
COSLA also suggests that council tax bands should be widened by the addition of new bands at the top and bottom of the scale, and that properties be revalued every five years to ensure that council tax accurately reflects their value.
As well as solving the widespread problem of fiscal deficit, COSLA contends that the increased powers would “allow for local flexibility, empowering local authorities to raise local funding for local priorities.”
Currently, councils raise 18% of their £10bn budget through council tax, but COSLA contends that 50% of the budget should be raised locally. This would be achieved by giving councils the power to set business rates, and to be able to “raise additional income by levying a tax… on either residents, occupants, property owners or visitors in the local authority or within a discrete area of the local authority.” In other words, setting local taxes independently of central government.
The COSLA submission also emphasises that the “intention is not to increase taxes, it is simply to empower local government to set and raise taxes that are suitable to the needs of the local community where there is clear local mandate to do so.”
COSLA is confident councils will receive public support due to Ipsos MORI opinion poll findings suggesting that 71% of people are willing to pay higher taxes if the money's spent on local services.
From our perspective, enforcing tax payments in such situations will represent a significant challenge. It will require sensitive handling and local knowledge to ensure devolved powers retain support and understanding.
The Commission on Local Tax Reform is due to complete its report on a ‘fairer local tax system for Scotland’ by September 2015.
For more information or assistance reclaiming unpaid debts, contact a Dukes Bailiffs advisor today.
According to the Local Government Association’s (LGA) annual ‘Future funding outlook report’, councils in England could lose as much as £3.3bn in central government funding in 2016/17; a sum equivalent to 12% of total budgets. The LGA figures, calculated using Office for Budget Responsibility forecasts, predict that budgets will subsequently be slashed by a further 11% in 2017/18 and another 4% in 2018/19, with an increase in funding not predicted until 2019/20. The question is, will councils be forced to sacrifice services to cope with the cuts?
How much can be cut?
Although many councils have dealt with budget constraints admirably, either by boosting and allocating reserves or making efficiency savings, we will invariably reach a point where this is no longer possible.
A survey by CIPFA found that nearly all of UK councils’ cash reserves have already been allocated to specific investments or to the management of risks. Outgoing LGA chief executive Carolyn Downs warns that increasingly risky integration deals are now in danger of compromising services.
LGA Chair, Cllr David Sparks, echoed Downs' points, warning: "There are no efficiencies left to be made for many councils... Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels.”
Can power devolution help?
While many councils will be forced to continue sharing, integrating and cutting services, we may also see a continued push for further devolved powers, which would give local authorities the flexibility to gear their finances towards protecting services most needed by their constituents.
A roundtable event hosted by Grant Thornton polled senior finance officers from 36 local authorities, and concluded that the current funding system is “inconsistent, unstable and uncertain”, and that further devolution of finance is required to enable councils to create their own financial stability.
Incoming LGA president Bob Kerslake sounded a similar rallying cry in an article penned for The Guardian, in which he called for more power, and more responsibility, for local government in dealing with financial strife.
While the battle is being fought, however, councils will need to make every penny count. If you need help recouping unpaid debts in a timely and sensitive manner, contact a Dukes Bailiffs advisor today.