REPORT OF THE

CABINET/LEADER

PART II

DRAFT LOCAL GOVERNMENT BILL

1. Members will recall that in December 2001 the Government published the White Paper "Strong Local Leadership - Quality Public Services", and subsequently set out an implementation plan for completion of the White Paper commitments. Many of these commitments require primary legislation and the Government intends to introduce a Local Government Bill as soon as parliamentary time allows.

2. A draft Bill was published for consultation and comments, and the Cabinet has responded on behalf of the County Council. Many of the commitments involve local government finance and the key measures set out in the draft Bill include:

_ provision to abolish credit approvals and replace them with a new prudential capital finance system


_ new duties on local authorities in relation to financial management


_ introduction of formula grant, and the merging of revenue support grant (RSG) and non-domestic rates


_ establishment of business improvement districts


_ changes to non-domestic rates, including rate relief for small businesses


_ introduction of a statutory revaluation cycle for the council tax, and various changes to the operation of the tax


_ changes to housing finance


_ new powers to charge for discretionary services and to trade


_ new powers for the Secretary of State to remove controls on authorities depending on their performance classification


_ proposals on local polls


_ voting rights for co-opted members on scrutiny committees

3. In responding, the Cabinet has welcomed the opportunity to comment on the draft Bill. On behalf of the County Council it has urged the Government to include legislation in the forthcoming parliamentary session to implement, as soon as possible, its proposals for the reform of capital controls, changes to the council tax and improvements to rate relief for small businesses.

4. The Cabinet continues to view, with grave concern, the increased prescription by the Government in some parts of the Bill which it considers will lead to further erosion of the Council's powers and scope for flexibility. It has suggested that Central Government should concentrate its attention on the few poorly performing authorities instead of excessive monitoring and regulation of the large majority of Councils who consistently perform efficiently and effectively.

5. The Cabinet considers that the fundamental issue of local government finance, is that the Government retains too much control over local authority income and that this matter is not addressed in the Bill. The Government has been urged to reconsider its decision to rule out the return of business rates to local control. The Cabinet is disappointed that no progress appears to have been made on the proposed review of the balance of funding (to enable Local Authorities both to have more local income and to exercise greater control over it).

6. The provisions in the Bill for additional regulation of financial management are regarded as unwelcome and unnecessary, particularly in the light of the comments by the Minister for Local Government, Nicholas Raynsford, MP, at the CIPFA conference in June when he said that he wanted to see local government rather than local administration and that "unnecessary controls and regulations will be replaced by a better targeted approach recognising good performance and encouraging improvement". The many reserve powers that the Bill grants to the Secretary of State imply increased detailed Government intervention and controls, rather than sweeping away "unnecessary controls and regulations".

7. The proposals on rate relief for small businesses and changes in Council tax have been welcomed, but on behalf of the Council the Cabinet has objected strongly to the proposal to merge the revenue support grant and national non-domestic rates, as it does not add to transparency and destroys the link between local business rates and the funding of local authority services.

8. The foregoing provides a broad summary of the comments submitted on behalf of the Council by Cabinet. A copy of the detailed letter of response, which was endorsed by all three political group leaders on the Council, is available on request to the Chief Executive.

T.K. THORNBER

Chairman

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