Unity amid localism - A fair starting point for council finance and benefit reforms?

By: Information Daily Staff Writer
Published: Monday, February 13, 2012 - 11:48 GMT Jump to Comments

Local authorities across Yorkshire and Humber are expressing serious concerns about the impacts Government proposals to localise support for council tax – and save £500 million in the process - will have on their local economies and communities.

Councils are highlighting the importance of working together, across authority boundaries, to try to make sure that people locally get as fair a deal as possible.

Government plans to cut the costs of Council Tax Benefit by £½billion nationally, and devolve responsibility for this to councils, in terms of giving them a duty to devise local - in practice more stringent - criteria for support. Government has been clear that pensioners must be protected from the change – which means that the focus of benefit cuts will be on people of working age, including perhaps in work but on low incomes. Cuts of up to 30% or more could therefore be expected, which are inevitably going to have significant impacts on household budgets.

Discussions are taking place, therefore, through the regional, cross-Party local authority alliance, Local Government Yorkshire and Humber, to see how local councils might join forces - perhaps across local economic geographies – to manage the local impacts as new, localised schemes are drawn up.

The focus of the Government’s policy – being implemented through the Local Government Finance Bill – is on new schemes of support at local authority level. However, local authorities in Yorkshire and Humber are conscious of the shortcomings of having, potentially, hundreds of different support schemes across the country, all with their own assessment methods, IT systems etc. So councils are identifying areas of common ground, to work on together.

Councils across Yorkshire and Humber are clear on the need for local government to have much greater financial responsibility and autonomy, so that it can become less reliant on the existing, complex grant system.

However, councils have real concerns that the model of benefit localisation as proposed could unfairly disadvantage local communities in the North, in comparison to other parts of the country. Over time, it’s likely that the existing economic divides between London and the South East and the rest of the country will be further widening.

These Council Tax Benefit reforms are also being introduced alongside radical changes in the business rates system, where the Government is localising business rates growth, to make local business rates a principle means of funding community services. Councils in Yorkshire and Humber fear that these changes will give more reward to the most successful local economies in the country, whilst disadvantaging those areas most in need of growth.

Councillor Peter Box, Chair of LGYH and Leader of Wakefield Council said: “The Government’s proposals to make community service funding reliant on local business growth, rather than an open assessment of need, could have serious and long lasting impacts in places such as our region.

There is no link between the amount of rates paid by businesses in any area and the public services the people living there actually need – whether it be social workers, libraries, refuse collections or leisure centres. Breaking the established link between funding and need could pose huge risks in some of our areas.”

Councils are identifying a number of ways that the local government finance proposals, could be amended, so as not to overly disadvantage local communities in Yorkshire and Humber.

This includes changes to the pace of the reform, which is seen as far too rushed. Councils have real fears that the Government’s plan to have the new system in force from April 2013 will not give authorities enough time to develop robust, fair and transparent local schemes, which will have been properly consulted on with those individuals and families affected.

A further worry is that the Government timetable is not in line with wider plans for Universal Credit, due for implementation from the autumn of 2013. The decision not to join up the two systems could well undermine and increase the overall costs of roll out, especially given that the same families are going to be affected.

But beyond the concerns about the timetable involved, Councils have emphasised the urgent need for Government to address a number of critical flaws in the proposals.

This includes a failure at present by Government to give councils the power to look at all council tax discounts, when drawing up local support schemes. Authorities’ hands will be tied, when it comes to amending such discounts – which apply to people as varied as university students and apprentices, to single people and diplomats. Ensuring discounts remain available to those who need them is clearly vital – but can a blanket ban by Ministers be considered “localism”?

Perhaps most importantly, however, there is a serious concern that these reforms will have little, if any, impact in creating the new or better-paying job prospects they rely upon. This was a key conclusion of the cross-Party House of Commons Select Committee inquiry, headed by Sheffield MP Clive Betts; and poses a real concern for Yorkshire and Humber, where unemployment numbers have been increasing by 3,000 a month since October 2011.

The focus on people of working age may also have to involve taking benefits away from people and families that are in work, which could have significant implications on individual motivations to remain in paid employment.

And the costs to councils of recovering payments from those who simply refuse to pay their council tax as a result of losing their benefits – and there will likely be many – are also going to be greater than the money owed.

In summary, these reforms are almost certainly going to result in considerable extra strain on local communities - at an already extremely sensitive and vulnerable time in terms of slow economic growth and depressed jobs markets. Ultimately, unless people get into work, Government will not be able to achieve their savings.

The clear message is that Government needs to relax its timetable for implementation, whilst more local discretion is given to achieve the best policy solutions, at community level.

But councils also understand that they have a fundamental role to play, for their communities, to make the new legislation work as best it can. This is why collaborative approaches on local schemes in Yorkshire and Humber could be so important, both to reduce the costs and bureaucracy of new schemes, and also to try to minimise any perverse impacts on people, at local level.

Cllr Peter Box continues: “as democratically elected Local Authority Leaders, it’s our fundamental role to work with our local communities - and our local consultations on these benefit reforms, to try to make people understand why they’re happening and what they may mean to them, is going to be critical, but hugely challenging.

We’ve got a great track record in Yorkshire and Humber of working together as local government – for example we pioneered the approaches around City Region working, which led to the emergence of Local Enterprise Partnerships.

However, with councils already facing extremely difficult decisions because of cuts to our funding, we do not want to see any more changes that will force even further public service cuts to our citizens. We must ensure that whatever changes in local government finance are taken forward are fair, support local economic growth and are based on the needs of communities and local people. Leaders in Yorkshire and Humber are united in their concerns and will continue to work together on this important issue.”

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