Local authorities would be in far better financial shape than they believe if they fully exploited their powers, local government minister John Healey told a conference of England’s eight biggest cities last week.
And he said this change, together with Government proposals to introduce new revenue-raising powers, would lever in millions of pounds for councils at a time when revenue support grant is tight at 1% extra a year.
Mr Healey told delegates at the annual core cities conference in Nottingham which was chaired by Channel 4’s Jon Snow: ‘Local government generates £1bn a year but only one in four councils aim to make a profit on this to re-invest or reduce council tax. The more enterprising councils could do a lot more. I asked for examples from the eight core cities and was told there were none.’
He added: ‘Prudential borrowing powers however are being well-used and there is indeed nothing to stop groups of local authorities from borrowing together.’ He concluded: ‘There is more use local authorities can make of their powers as well as the ones we are proposing.’
In the pipeline are planning charges raised on new developments to finance infrastructure alongside the existing s106 agreements.
There are also plans for a supplementary business rate - as proposed by the Lyons Review - and workplace parking levies which in the case of Nottingham could generate £12m in new revenue.
Mr Healey claimed every £1m raised by SBR would lever in £10m from private investment could provide up to £28m in Greater Manchester, £27m in the West
Midlands, £10m in Leeds, £5.9m in Sheffield, £4.8m in Bristol, £4.2m in Nottingham and £4m in Newcastle. A typical SBT charge would be 2p in the pound.
Core cities director Chris Murray said 16.5m people lived in the regions around the eight cities, Leeds, Manchester, Nottingham, Bristol, London, Newcastle, Liverpool and Birmingham.
Communities secretary Hazel Blears also announced 13 new sub-regions made up of multi-area agreements of local authorities whose local priorities will be decided by next April and welcomed more bids.
Two ways to improve local authority finances
The NAO has concluded insufficient action has been taken to address weaknesses in council finances. Teams from TLT LLP consider what councils should do next.
