An employers' organization called on the government to 'step up the pace of action' on community budgets. It highlighted the benefits of sharing resources and collaborating at a local level. Community budgets would allow the government to tackle complex social issues by co-ordinated action between health, education, police, probation, and welfare services – saving local authorities around £18 billion annually in England alone.
Source: Joining Up, Joining In: Why the time is right for expanding community budgets, Confederation of British Industry/Municipal Journal
Links: Report | CBI press release
Date: 2011-Dec
The Local Government Finance Bill was published. The Bill was designed (following consultation) to end the existing system under which all business rates in England were paid into a central pot and then redistributed to local councils using a grant. Instead, councils would be able to directly retain a portion of their business rate growth. A system of tax increment financing would give local authorities the freedom to borrow against future income from business rates, and use the money to pay for road and transport projects and other 'local priorities'. A levy would be introduced to take back a share of growth from councils deemed to be gaining disproportionately from the changes. This money would then be used to fund a safety net to support councils that experienced a significant drop in business rates through events such as the closure of a large business.
Source: Local Government Finance Bill, Department for Communities and Local Government, TSO
Links: Bill | Explanatory notes | Impact assessment | Hansard | DCLG press release | Government response to consultation | Consultation responses | Labour Party press release | RICS press release | BBC report | Public Finance report
Date: 2011-Dec
A think-tank report said that local councils could finance vital infrastructure projects through a new market in municipal bonds. Bond issuances could in some circumstances prove the cheapest option for local authorities trying to promote growth in their areas.
Source: Tom Symons, Capital Futures: Local capital finance options in an age of recovery, New Local Government Network
Links: Summary | Public Finance report
Date: 2011-Dec
An article said that despite growing cross-party support for the principles of localism, the coalition government's radical devolution agenda looked set to provoke a level of tension in central-local relations not seen since the 1980s. The central cause of this friction was the front-loading of cuts in the local government financial settlement for 2011-2013.
Source: Stuart Wilks-Heeg, '"You can't play politics with people's jobs and people's services": localism and the politics of local government finance', Local Economy, Volume 26 Number 8
Links: Abstract
Date: 2011-Dec
The coalition government published its formal proposals on the distribution of formula grant to English local authorities for 2012-13. The average spending cut would be 3.3 per cent (or £75 per household). No council would see their overall spending power fall by more than 8.8 per cent. Councils that sought to increase council tax by more than 3.5 per cent would be forced to hold a local referendum.
Source: The Local Government Finance Report (England) 2012/2013: Draft, Department for Communities and Local Government
Links: Report | Plain English guide | Hansard | DCLG press release | Labour Party press release | LGA press release | BBC report | Community Care report | Guardian report | Public Finance report
Date: 2011-Dec
An audit report said that local councils in deprived areas of England were the most affected by cuts in central government funding imposed by the coalition government.
Source: Tough Times: Councils responses to a challenging financial climate, Audit Commission
Links: Report | Audit Commission press release | BBC report
Date: 2011-Nov
A report by a committee of MPs said that the system for distributing central government funding to local bodies was complex and difficult to understand, and too often resulted in local public bodies getting the wrong amount of money.
Source: Formula Funding of Local Public Services, Fifty-fifth Report (Session 2010-2012), HC 1502, House of Commons Public Accounts Select Committee, TSO
Links: Report | BBC report | Public Finance report
Date: 2011-Nov
The government began consultation on proposals to amend council tax rules, including giving local councils in England the flexibility to reduce or remove council tax relief on second homes and empty homes.
Source: Technical Reforms of Council Tax: Consultation, Department for Communities and Local Government
Links: Consultation document | Hansard | DCLG press release | NLA press release | Inside Housing report | Public Finance report
Date: 2011-Oct
The coalition government announced that it would provide funds to enable all local authorities to freeze council tax in 2011-12 (repeating the freeze in 2010-11), at a cost of £805 million.
Source: Press release 3 October 2011, HM Treasury
Links: HMT press release | Speech | Conservative Party press release | Labour Party press release | PCS press release | Guardian report | Public Finance report
Date: 2011-Oct
A briefing paper examined coalition government proposals to replace council tax benefit with local schemes of support, and responses to those proposals.
Source: Wendy Wilson, Localising Support for Council Tax, Standard Note SN/SP/6101, House of Commons Library
Links: Briefing paper
Date: 2011-Oct
A report examined the impact of planned local government spending cuts on regulatory services (such as environmental health, trading standards, and licensing) in England and Wales.
Source: Local Authority Regulatory Services Budgets 2011-12, Local Better Regulation Office
Links: Report | LBRO press release
Date: 2011-Sep
A think-tank report examined proposals for reforming local government finance, including allowing councils to retain the proceeds of business rates. There were major challenges involved in achieving a fairer and more effective distribution of resources, and any long-lasting settlement required genuine local and national cross-party support.
Source: Dan Corry and Chris Wales, The Case for Consensus: Reforming local government finance, Smith Institute
Links: Report
Date: 2011-Sep
A report said that rural local councils in England received 50 per cent less government grant per head of population than councils in urban areas..
Source: Jude Ranasinghe, Costs of Providing Services in Rural Areas, Sparsity Partnership for Authorities Delivering Rural Services
Links: Report | RSN press release | BBC report
Date: 2011-Sep
A report examined participatory budgeting processes in England. It considered what worked in their operation, and the results/outcomes achieved by them. Participatory budgeting was most effective when used in conjunction with other community engagement processes. It could attract additional funds into deprived areas by providing an effective means of distributing resources that funders felt confident they could work with.
Source: SQW, Cambridge Economic Associates, and Geoff Fordham Associates, Communities in the Driving Seat: A study of participatory budgeting in England, Department for Communities and Local Government
Links: Report
Notes: Participatory budgeting involves local people in making decisions on the spending priorities for a defined public budget.
Date: 2011-Sep
A report examined the role of accounting officers in reconciling the coalition government's localism agenda with the need for continued accounting to parliament for the use of public money.
Source: Accountability: Adapting to Decentralisation, Department for Communities and Local Government
Links: Report
Date: 2011-Sep
An article examined the nature and structure of the 'four-block' model that was used by central government to distribute nearly £25 billion of formula grant to local authorities in England. The model was 'deeply flawed' and generated an inequitable allocation of revenue. The government needed to revisit its resource allocation methodology 'as a matter of urgency'.
Source: Alex Gibson and Sheena Asthana, 'Resource allocation for English local government: a critique of the four-block model', Journal of the Royal Statistical Society: Series A, Volume 174 Issue 3
Links: Article
Date: 2011-Jul
A think-tank report said that allowing local councils in England to retain a fixed proportion of 40-60 per cent of their business rate growth would provide the strongest incentive for commercial development. This would be a better option than introducing a rebasing system, growth cap, or sliding scale of deduction.
Source: Kieran Larkin, Zach Wilcox, and Christiana Gailey, Room for Improvement: Creating the financial incentives needed for economic growth , Centre for Cities
Links: Report | Summary | Public Finance report
Date: 2011-Jul
An audit report said that central government had failed to set out clearly, or explicitly prioritize, its multiple objectives for the design and distribution of either the dedicated schools grant or the formula grant to local authorities in England. This prevented analysis of the extent to which the formulae represented the best way to satisfy their objectives.
Source: Formula Funding of Local Public Services: Cross-government landscape review, HC 1090 (Session 2010-2012), National Audit Office, TSO
Links: Report | NAO press release | Public Finance report
Date: 2011-Jul
The government began consultation on proposals to allow the local retention of business rates by councils in England, and to let them borrow against future rate income.
Source: Local Government Resource Review: Proposals for Business Rates Retention, Department for Communities and Local Government
Links: Consultation document | DCLG press release | BCC press release | CIPFA press release | IOD press release | Labour Party press release | Localis press release | BBC report | Public Finance report
Date: 2011-Jul
A briefing paper examined the coalition government's local government resource review, designed to give English local authorities greater autonomy and financial freedom.
Source: Chris Sear, The Local Government Resource Review, Standard Note SN/PC/06030, House of Commons Library
Links: Briefing paper
Date: 2011-Jul
A briefing paper examined the coalition government's plans for community budgets in England – place-based budgets bringing different national and local funding strands together into a single local funding pot and, by doing so, enabling various different agencies covering the relevant subject to work together.
Source: Chris Sear, Community Budgets, Standard Note SN/PC/05955, House of Commons Library
Links: Briefing paper
Date: 2011-Jun
A briefing paper examined proposals by the coalition government to allow local authorities to use tax increment financing in order to finance infrastructure projects.
Source: Chris Sear, Tax Increment Financing, Standard Note SN/PC/05797, House of Commons Library
Links: Briefing paper
Date: 2011-Jun
A think-tank report said that the coalition government's decision to increase the cost to local councils of borrowing from central government could threaten their ability to promote local economic growth, community development, and regeneration.
Source: Tom Symons, Localist Capital Finance: The challenges ahead, New Local Government Network
Links: Report | NLGN press release | Public Finance report
Date: 2011-May
A think-tank report said that allowing local authorities to retain business rates at the local level (rather than pooling them nationally) would create significant new incentives for economic growth, as well as providing a platform for a 'full-scale localist shift' in the near future.
Source: Tom Shakespeare and Tom Simpson, The Rate Escape: Freeing local government to drive economic growth, Localis
Links: Report | Localis press release
Date: 2011-Mar
A briefing paper examined coalition government plans (announced in September 2010) to allow local authorities to use 'tax increment financing' in order to finance infrastructure projects.
Source: Chris Sear, Tax Increment Financing, Standard Note SN/PC/05797, House of Commons Library
Links: Briefing paper
Notes: Tax increment financing allows local authorities to borrow money for infrastructure projects against the anticipated increase in business rates income expected as a result of the projects.
Date: 2011-Mar
Final details were published of the financial settlement for local authorities in England for 2011-12.
Source: The Local Government Finance Report (England) 2011/2012, HC 748, Department for Communities and Local Government, TSO
Links: Report | Hansard | DCLG press release | LGA press release | CCN briefing | Labour Party press release
Date: 2011-Jan