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Finance & devolution

Finance & devolution

SEEC supports a major review of local government financing to deliver more sustainable funding for local government.

Our recent work has included:

SEEC’s response to Government consultation on 100% Business Rates Retention in May 2017 supported the introduction of partial resets to incentivise growth by ensuring all tiers of council will retain some long-term financial benefits from delivering economic growth. Our submission stated that some councils would welcome opportunities for business rate pooling and to create local growth zones, however these should be voluntary and not centrally-imposed.

In September 2016, SEEC input to CLG business rate consultations on 100% Retention and Needs and Redistribution called for changes that provide a clear financial reward to South East councils for delivering economic growth. SEEC also called for a move towards assessing funding need on a per capita basis as a fairer and more transparent way to fund everything from social care to infrastructure to deprivation. At present – despite being a high cost and highly populated area – South East councils as a whole receive the lowest per capita Government funding in England.

In October 2015, concern among SEEC members about the process for devolving powers to English local authorities outside cities, led SEEC to call for South East councils to have access to the same level of devolved funding and powers that are available in other parts of the UK. SEEC input to an All Party Parliamentary Group for Reform, Decentralisation & Devolution proposes five key principles that should underpin future progress: An open, accountable approach to negotiating devolution deals; Clarity on the criteria used to judge successful and unsuccessful bids; Consistent devolution offers across all parts of the UK; Linking powers with control of funding; Long term sustainability.

SEEC published research to illustrate the the impact of devolving property taxes to South East councils in March 2015. The work by finance experts Local Government Futures showed that devolving 100% of business rates and stamp duty – alongside existing council tax – could replace non ring-fenced grants. This would not only make the South East self sufficient, it would also give the area a projected surplus of £3.3bn to invest in infrastructure and services.  This would give councils control of 11% of total South East taxes, with central government still receiving 89% of all taxation paid in the South East.

Giving councils more control over their income is essential to improve local democratic accountability and enable South East councils to invest  in future economic growth and to fund the local infrastructure and services needed to support such growth.

Investing in the economy is particularly important in the South East, which is recognised as the engine room of UK PLC. Over the 10 years from 2002-12 the South East paid £80bn more in taxes than it received in public spending. This ‘profit’ funds public spending UK-wide.  Allowing South East councils to keep just 11% of taxes would enable them to invest more in jobs growth, with the benefits shared locally and nationally.

In 2014 SEEC submitted evidence to the LGA/ CIPFA Independent Commission on Local Government Finance, again calling for greater devolution of funding, including business rates and stamp duty.

Initial evidence  in summer 2014 called for a more transparent system based on principles of greater local control, longer term certainty and equal access for all two tier areas to city-deal-type devolution.

Responding to the Commission’s interim report in winter 2014, SEEC emphasised the importance of accountability to local communities and the role of incentivising councils. SEEC also argued for rebalancing of income to be carried out within the South East rather than nationally as this would allow the South East to better address significant levels of disparity within the area.