Jonathan Carr-West: Finance settlement was cautious and underwhelming

By Dr Jonathan Carr-West | 19 December 2017
  • Dr Jonathan Carr-West

Today’s statement on the local government finance settlement represents some progress. Less than we might have hoped but as much, perhaps, as it was reasonable to expect.

We have a direction of travel at least with a review of the allocation formula out for consultation and due to take effect from 2020/21. And this will run alongside progress towards retention of 75% of business rates (probably). 

So it’s not quite the revolution that George Osborne promised back in 2015 and there’s still an awful lot of room for slip between the cup of consultation and the lip of delivery. But it does feel like there’s less uncertainty about the post 2020 system and that has to be a good thing.

There will also be a welcome in the sector for measures to address negative RSG and the commitment to make no further changes to the New Homes Bonus.

And for ten areas good news in the announcement that they will be piloting business rate retention, though it remains a little odd that we are piloting at scale a policy of 100% retention that, as this statement makes clear, will never actually happen. That feels less like policy and more like a scramble for resources.

So all in all it’s OK. A bit of extra clarity, a recognition that we need more fundamental change. But at the same time it may leave many in local government feeling somewhat underwhelmed.

It all remains more at the level of intention than plan and it’s hard not to notice the extent to which the statement is carefully peppered with phrases like 'formal consultation', 'subject to suitable transitional measures', 'Full details will be published in due course' and 'will be looking at'…

So it’s a careful statement, anxious not to give to many hostages to fortune whilse doing its best to keep the sector on side. That’s inevitable perhaps from a  government with little political capital and lots of challenges to work through.

We know from our annual finance survey with The MJ that eight out of ten senior decision makers in local government think the finance system is not fit for purpose. We’ll find out in the new year whether this statement changes that view but I suspect not. 

St Augustine famously prayed 'Lord make me chaste - but not yet!'. There was an echo of that in today’s statement 'Everything must change - but not yet'.

Jonathan Carr-West is chief Executive of think-tank LGiU

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