Archived decisions

LOCAL GOVERNMENT BALANCE OF FUNDING REVIEW

1. In 2001 in its White Paper "Strong Local Leadership - Quality Public Services" the Government promised to set up a high level working group to look at all aspects of the balance of funding. In January this year, a steering group of 22 people was established, drawn from a variety of backgrounds and chaired by the Minister for Local and Regional Government.

2. To assist the steering group in its deliberations, the Cabinet has now responded on behalf of the County Council to a Government invitation to prepare short papers on the topic and to respond to a variety of questions. In summary the Cabinet has expressed the view that a major change to the balance of funding is necessary to give local authorities the capacity to deliver the services that local people and the Government require. It suggests that change can be achieved by

· transferring the business rate to local control, thereby improving the balance of funding to 50/50 subject to linking future increases in business rates to the retail price index or such other relevant index as may be considered appropriate;


· fine-tuning the council tax by revising the rate between the top and bottom valuation band and by increasing the number of bands to make it less regressive;


· improving the council tax benefits system to give better protection to those on low and slowly rising incomes by raising the benefit threshold;


· reversing the "resource equalisation" introduced in the revenue grant distribution system in 2003/04 or, at least, not making further resource equalisation adjustments in 2004/05 or subsequent years.


The Cabinet has also asked the Government to refrain from making any further transfers of services away from local government such as schools, because their needs are best assessed locally and in view of the complexity of school funding, and from introducing a local sales tax or a local income tax. In addition, it has rejected the Government's new concept of "dynamic equalisation" which suggests that tax-rich authorities would have to pay over to tax-poor authorities part of the proceeds from any tax increase they wish to levy on their own taxpayers. After the losses of grant following the Government's review of revenue grant distribution in 2003/04, the Cabinet considers it unacceptable for Hampshire taxpayers to have to find yet another higher tax increase so that part can be transferred to finance further spending in urban areas in the North and Midlands.

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