DCN: REWARD, DON’T PUNISH, DISTRICTS IN FINANCE SETTLEMENT
District councils should be rewarded and not punished for delivering more homes whilst facing the biggest cut in their spending power than any other type of council, DCN urged today.
In its response to the 2019/20 Local Government Finance Settlement Technical Consultation, district council leaders argue that the New Homes Bonus (NHB) baseline should be scrapped.
DCN, which represents 200 district councils across England, is also calling for decisions on council tax to be set locally – not by nationally set referendum principles – and for greater flexibility on local revenue-raising powers.
If Government continues to set referendum principles, DCN is further calling for a 3 per cent prevention precept to reflect the significant role that Districts play in prevention and reducing demand on adult social care and primary health services, ending the imbalance on council tax in district/county areas. This precept could raise an extra £42 million for district councils to help keep people from needing to access acute social care and the NHS by reducing demand for these services. In addition the existing £5 limit on district council precepts must be raised to £10.
District councils have seen a near 14 per cent cut in their spending power – far more than other types of councils who have seen an increase – during the current spending review period.
As the housing and planning authorities, Districts fully supports the NHB as a powerful incentive to deliver housing and economic growth, but believe plans to increase the NHB baseline is a “perverse” incentive by reducing the reward for those local communities that have embraced additional new homes. The introduction of the 0.4 per cent baseline threshold for the NHB removed more than £70 million in funding from district councils in 2017/18 and this could increase if the baseline if further extended.
DCN is also concerned that any changes of approach to NHB beyond 2019/20 risks further uncertainty when Fair Funding and 75% Business Rates Retention comes into force.
It is calling for further discussions with government prior to formal consultation.
Cllr Sharon Taylor, DCN Member Board Lead for Sustainable Finance, said:
“Of all councils, Districts have had their core spending power reduced the most. Due to the demands on the social care system in particular, it is crucial that the system is not further destabilised by more reductions in funding to district councils that would undermine their ability to do work on prevention that saves money for both social care and the NHS.
“New Homes Bonus has been a powerful driver for housing growth, but increasing the baseline would be a perverse incentive because it would penalise the very councils which have succeeded in meeting Government’s housing targets. We are against the proposal to increase the baseline, which instead should be scrapped.
“It is paramount for Districts to be given more financial flexibilities that will help them not only to deliver on both their prevention role, but also further succeed in delivering new homes to tackle the housing crisis, providing homes people desperately need.
“As highlighted by the APPG inquiry into District Council Finances, further measures are needed to empower Districts to help achieve the Government’s housing targets, such as lifting the borrowing cap and allowing councils to retain Right to Buy receipts for much longer.”
NOTES TO EDITOR
- The District Councils’ Network (DCN) is a cross-party member led network of 200 district councils. We are a Special Interest Group of the Local Government Association (LGA), and provide a single voice for district councils within the LGA.
- District councils in England deliver 86 out of 137 essential local government services to over 22 million people – 40 per cent of the population – and cover 68 per cent of the country by area.
- DCN’s full response to the Local Government Finance Settlement Technical Consultation is available here.
District Councils’ Network media office, 020 7664 3333