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Finance settlement: 'Northants council tax powers reward failure'

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Questions have been raised over the housing and communities secretary’s decision to grant Northamptonshire CC individual freedom over raising council tax, while councils have warned the final financial settlement will not come close to plugging the funding gap.

James Brokenshire today confirmed the implementation of proposals in the provisional settlement ,which he said would increase councils’ core spending power from £45.1bn in this year to £46.4bn in 2019-20.

However, he announced Northamptonshire, which issued a section 114 notice last year, will be able to raise council tax by 5% without a requirement to hold a referendum “to assist with the improvements to council governance and services”.

Mr Brokenshire in November granted Northamptonshire permission to use £70m of capital receipts to help balance its books after commissioners warned the council would not be able to set a balanced budget this year.

Responding to the decision Rob Whiteman, chief executive of the Chartered Institute of Public Finance & Accountancy, said: “Perhaps the surprise is that the dispensation given to increase council tax by more than the referendum limit is not a bigger number.

“It’s a unique situation where I don’t think the government is driven by rewarding failure – it’s being driven by wanting to set up new authorities on a sustainable baseline.”

Tony Travers, director of LSE London, described giving Northamptonshire individual council tax freedom as “the thin edge of the wedge”.

He added: “Having rules for a single authority is very intriguing.

“At the point where you have separate rules for individual councils any sense begins to erode.

“It does suggest a degree of fear within [the Ministry of Housing Communities and Local Government] that they need to do something.

“You are rewarding an authority that fails to balance its books. Nothing succeeds like failure.”

Peter John (Lab), chair of London Councils and Southwark LBC leader, said the settlement means councils in the capital will have to make millions of pounds of savings next financial year when key services are “already overstretched and struggling”.

He also questioned the decision to distribute the £410m social care support grant announced in the autumn Budget, which can be spent on both children’s social care as well as adults, using the adult social care relative needs formula. This is on top of £240m specifically for adult social care.

Cllr John said: “We also have reservations about the way funding is being shared between different local authorities.

“While an additional £650m for adults and children’s social care in 2019-20 is welcome, it is being distributed according to adult social care demand only.

“This will mean that overwhelmed children’s services departments across the country will not be able to access the funding they need, putting vulnerable children at risk.”

Cllr John added the settlement is “proof that a new vision for local government is sorely needed”.

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