Whitehall officials rushed out the provisional local government finance settlement days before Christmas despite knowing the figures it was based on were wrong, The MJ has learnt.
Last week, the Ministry of Housing, Communities and Local Government (MHCLG) admitted it would have to rip up the provisional settlement after the Valuation Office Agency (VOA) updated tables on its website, blaming a ‘fault in the process used to extract data’.
??WATCH: I’ve raised an urgent Point of Order demanding the Communities Sec apologises to Parliament for the Local Gov Finance Settlement debacle. @themjcouk are reporting that data given to Parliament before Christmas was not only incorrect but DCLG knew it was wrong beforehand. pic.twitter.com/gPr75M05Mm
— Andrew Gwynne MP (@GwynneMP) January 24, 2018
But The MJ can reveal the VOA informed the then Department for Communities and Local Government (DCLG) prior to the publication of the provisional settlement.
DCLG officials – keen to publish the provisional settlement before Christmas to avoid any delay to the consultation and final settlement – are understood to have been informed too late to make any changes and went ahead regardless.
One local government source said: ‘The DCLG had been under a lot of pressure to publish the settlement. It’s never not been published before Christmas.’
Chief executive of the Chartered Institute of Public Finance and Accountancy, Rob Whiteman, said: 'If the VOA told the DCLG in advance, as claimed, it would have been better for the department to announce the error with the settlement.
'Mistakes happen and it's usually better to come clean as soon as possible.'
The MHCLG confirmed this week that 188 authorities would benefit from the change to the figures while 195 face a shortfall, with Manchester City Council understood to have lost out the most to the tune of £633,000.
Today (January 24), shadow local government secretary, Andrew Gwynne, accused ministers of presenting 'incorrect' information to the House of Commons.
Mr Gwynne said: 'Given that 195 local authorities are now set to lose out, with Manchester City Council understood to be the biggest loser, can you advise me whether the Secretary of State for Housing, Communities and Local Government has indicated that he will make statement to the House about this debacle and apologise to members for his department knowingly having given the House incorrect information?'
He told The MJ: 'This is a complete and utter shambles.
'After eight years of cuts, councils are facing unprecedented pressures to balance their books.
'This task has been made even harder by a Government that has no grasp on the figures.
'We need to know why [local government secretary] Sajid Javid decided to present these figures knowing that they were wrong, why he allowed councils to set budgets for next year based on incorrect data and why it took him so long to publish a correction.'
Mr Gwynne has written to Cabinet Office permanent secretary John Manzoni formally raising his concern that Mr Javid may have breached the ministerial code by knowingly misleading Parliament.
He wrote: 'Disregarding these rules deeply undermines public trust in the democratic processes and does a disservice to those members that ensure they follow the rules laid out on these matters.
'In light of the conduct of the Secretary of State for Housing, Communities and Local Government, I request that the incident be investigated to determine as soon as possible if a breach of the ministerial code has taken place.'
Overall, the mistake – understood to have been noticed after a council queried the figures with DCLG – will benefit local government by £2.6m.
However, president of the Society of Local Authority Chief Executives, Jo Miller, has this week written to MHCLG urging the Government to ensure no authorities will be left worse off than the position published in last month's provisional settlement.
Chairman of the Local Government Association, Lord Porter, called for the Treasury to stump up the extra cash.
He said: ‘This unhelpful error by the VOA has added to the challenge facing councils when trying to set a budget for 2018/19.
‘The Treasury needs to use its central share of business rates to ensure that no council receives less than what they have been planning for in 2018/19 following the allocations published in the provisional settlement.’
Chair of London Councils, Cllr Claire Kober, added: ‘We welcome the clarification of these statistics, but are concerned about the lateness of the revision, given how close councils are to setting their budgets.
‘The distribution of millions of pounds of public money depends on correct information from the VOA.
‘The importance of this will only increase as the sector moves to 75% business rates retention from 2020/21. This error strengthens the case for the VOA’s work to be devolved to a local level to provide greater local accountability over its performance, give businesses greater certainty and confidence about their business rates bills and add more stability to funding for local services.’
Shadow housing, communities and local government minister, Yvonne Fovargue, this week highlighted National Audit Office concerns last year about the DCLG and VOA’s capacity.
Ms Fovargue said: ‘The local government finance settlement descended into a complete and utter shambles last week.
'This new error will certainly not engender confidence in the department.’
Chief executive of the Institute of Revenues, Rating and Valuation, David Magor, said: ‘The revised figures indicate it’s a little bit more than an adding up error. It’s outrageous that this mistake should be made. We’ve relied on figures from the VOA since time immemorial.’
One senior council finance officer added: ‘It’s time for the Treasury to get a grip and start managing the VOA’s performance. If business rates is the driving force for financing moving forward then VOA effectiveness is more and more important.
‘The final settlement must be published before recess [on 8 February] with no detriment to the provisional figures for any council at this late and avoidable stage.’
Another senior officer said: 'Let's hope the mistake isn't the result of excessive reductions in VOA funding and staffing.
'Goodness knows how the agency is going to cope with more frequent business rates revaluations if it can't get this information right.'
