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Borough's bid for independence wins DCLG backing

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A London borough’s bid for financial independence from the Treasury has taken a major step forward after winning the support of key ministers, LGC has been told.

Leader of Kingston upon Thames RBC Kevin Davis (Con) has said ministers from the Department for Communities & Local Government had backed its plan to eliminate its reliance on revenue support grant (RSG), councils’ main funding source.

Under the south London borough’s roadmap towards financial independence, it would forgo its £18.6m share of the centrally set RSG in exchange for a greater share of business rates.

Of the £81.8m of business rates Kingston upon Thames expects to collect this year, it will only keep 30%, returning half the amount to the Treasury while passing the remaining 20% to the Greater London Authority.

By increasing its share to 54% at the Treasury’s expense, Kingston would no longer require a penny of RSG and could reduce its planned budget cuts from £27m to £10m over the next two years.

Cllr Davis said DCLG officials were now preparing a paper to be presented to the Treasury.

“As always with these things it comes down to the Treasury. My judgement is it’s a great deal because it gives us independence but it still gives the Treasury a stake in our growth,” he said.

He added that financial independence would motivate Kingston to drive economic growth and would still benefit the Treasury, despite the chancellor’s share shrinking to 26%.

Cllr Davis said Kingston’s plan would also help it to adopt a “much more entrepreneurial approach” to running the council.

Kingston has recently agreed a deal with supermarket giant Lidl to relocate its UK headquarters to the borough, a move likely to boost business rates growth when it opens.

He added that Kingston was happy to keep paying into the distribution pot for the rest of the country and would not seek power to set business rate levels. “I’m trying to keep [the offer] as simple as possible,” Cllr Davis said.

“The big risk is if the economy crashes and business starts to dry up, then actually we’d struggle as a borough. But if business went bust to that sort of level [everywhere would] be in trouble.”

He noted that Kingston’s businesses had not struggled too much in the recent recession.

A spokesman for the DCLG said: “The government has made clear it is ready to have conversations with any area about their proposals for the devolution of powers and this includes budget arrangements.”

Details of Kingston’s bid for financial independence was first reported by LGC in January.



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