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Finance settlement: Brokenshire issues commercialisation warning

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Housing and communities secretary James Brokenshire has warned councils he might seek to intervene in the way councils invest for commercial gain as he delivered the finance settlement.

In a settlement that brought few surprises Mr Brokenshire said he “shared the concerns” of Chartered Institute of Public Finance & Accountancy in relation to some councils’ commercial investments, especially in relation to “risks they are exposing” themselves and the public to.

He said he would discuss with the Treasury “whether further intervention might be required” on this issue.

Recent research by the Bureau of Investigative Journalism, in conjunction with LGC, showed how the number of councils investing in real estate has doubled in the last two years with in-year spending rising to £1.8bn.

Meanwhile, Mr Brokenshire confirmed the government will cover the £153m cost of negative revenue support grant.

The new homes bonus baseline for growth will be maintained at 0.4%.

He also outlined plans to create 15 more business rates pilots in 2019-20. These will pilot 75% rates retention, while areas with devolution deals will continue to retain 100% of the uplift in rates in their respective areas.

The successful 75% rates retention pilots are:

  • Berkshire
  • Buckinghamshire
  • East Sussex
  • Hertfordshire
  • Lancashire
  • Leicestershire
  • Norfolk
  • Northamptonshire
  • North and West Yorkshire
  • North of the Tyne
  • Solent authorities
  • Somerset
  • Staffordshire and Stoke
  • West Sussex
  • Worcestershire

In addition the government has announced it is intending to distribute £180m of surplus business rates income to all local authorities. It proposes to share it on the basis of need. A consultation on this is to be launched alongside the provisional settlement.

On council tax, Mr Brokenshire confirmed reports that the police precept on council tax bills can rise from £1 a month to £2 a month from April 2019. The core council tax referendum limit will remain at 3%.

The rural services delivery grant (worth an extra £16m, rising to £81m) is to be maintained in 2019-20.

An extra £650m for children’s and adult social care was previously announced in the Budget. Mr Brokenshire said the social care green paper would be published “soon”.

Another consultation document on the fair funding review, and business rates reform, is due to be published later today.

Mr Brokenshire also announced plans to “launch a continuous improvement tool in spring 2019” which would promote efficiency in local government.

“We’re working with local authorities to promote efficiency and using this, we will develop a package of support to help councils become more efficient and get better service outcomes,” he said.


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