Heather Jameson 19 July 2021

MPs call for urgent council finance reforms

MPs call for urgent council finance reforms image

Councils should be given more flexibility to raise their own taxes and social care funding urgently needs to be reformed, MPs have said.

The Housing, Communities and Local Government (HCLG) select committee also called for the fair funding review and business rates reset to be brought forward in a bid to stabilise council finances.

In the aftermath of a spate of S114 notices, the committee called for a finance ‘yellow card’ for councils, an intermediate step for chief finance officers to warn of issues before the finances collapse.

Chair of the HCLG committee, Clive Betts, said: ‘Council budgets have been stretched for several years and the social care funding crisis is at the heart of financial pressures for many councils.

‘A solution to social care funding would go a long way to restoring local government finances.’

He acknowledged the financial support central government had made during the pandemic, but said there was now a need or a long-term solution for councils.

‘The system of local government finance should enable councils to increase revenue by growing their tax base while protecting those councils who are less able to do this, through no fault of their own,’ he claimed.

He called for councils to be allowed to retain 75% of business rate without cuts to grant funding, with additional funds for equalisation.

‘In the longer-term, the Government should consider options for wider reform of council tax and business rates, including possibly replacing them with a proportional property tax,’ he added.

Chair of the Special Interest Group of Municipal Authorities, Cllr Sir Stephen Houghton, said: ‘It is clear the government must move forward on the current set of reforms proposed.’

But he added: ‘It is important that they do not make the mistakes of previous reforms by reducing the needs basis and part-replacing with incentivisation pots.

For your free daily news bulletin
Highways jobs

Social Worker - Adult Social Care (CLDT)

Bolton Council
This is a permanent Social Work role in Adult Social Care. Bolton, Greater Manchester
Recuriter: Bolton Council

Principal Programme Officer

Bolton Council
Do you enjoy variety and change? Can you keep your eye on the detail whilst also thinking strategically? Bolton, Greater Manchester
Recuriter: Bolton Council

IDT Junior Developer

Telford & Wrekin Council
£28,226 - £30,095
Telford & Wrekin Council are seeking an enthusiastic and highly motivated Junior Developer. Telford, Shropshire
Recuriter: Telford & Wrekin Council

Activities Leader (Outdoor Adventurous Activities)

Leicestershire County Council
Lead activities and ensure that delivery of programmes are of a high standard. Leicester, Leicestershire
Recuriter: Leicestershire County Council

Transition Support Worker (Complex Needs)

Leicestershire County Council
This is an exciting opportunity for to work with an experienced team delivering high quality learning opportunities and care. Leicester, Leicestershire
Recuriter: Leicestershire County Council

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.