A group of influential councils will today urge ministers to quickly hand new financial powers to local authorities – including the retention of business rates, new borrowing powers and control of merged public sector budgets.
The City Finance Commission (CFC) – set up by Birmingham, Manchester and Westminster Councils – is due to publish its final recommendations to overhaul local finance systems later today (23 May).
The report will urge ministers to allow authorities to keep the growth in business rates and council tax generated by new developments. It will also call for the swift introduction of tax increment finance (TIF) powers, which would allow authorities to borrow against predicted increases in business rates income from new developments.
Ministers are currently working on proposals to introduce TIFs to England – the regime is already being piloted in Scotland – and to allow councils to retain a larger share of locally-raised business rates. Some of the coalition proposals will be outlined in full when communities secretary Eric Pickles completes a Department for Communities and Local Government finance review later this summer.
The CFC will also call for major cities to pilot a radical regime under which authorities are handed control of all employment, health, skills, adult education and housing spending.
The Total Place-style pilots, it is argued, would demonstrate whether councils and their partners could spend and allocate cash for local public services more effectively than Whitehall.
Sir Richard Leese, leader of Manchester City Council, said the CFC's proposed changes would 'allow us to reinvest the benefit to further promote growth'.
