UK Government

Communities and Local Government: PBR 2009 – a fair outcome and a clear challenge for Local Government

Press Release   •   Dec 11, 2009 11:32 GMT

Communities Secretary John Denham and Housing Minister John Healey have welcomed the Pre-Budget Report as a fair outcome for local government – but one that sets it a clear challenge to protect frontline services in the future.
John Denham said that councils will benefit from a very positive financial settlement next year but tough decisions lay ahead to further drive down inefficiencies and help reduce the public deficit, while safeguarding the services that matter most to people.

John Denham said:

"This is a fair and challenging outcome for local government."

"There will be a further four per cent increase in resources for councils in the coming year because this is still the right time to be investing in local services to help lock in recovery.

"But local government - like national government - will have to share in the tough choices that need to be made in the years ahead to enable us to reduce the deficit, ensure that the economy and jobs grow and to protect frontline services which matter most to people. This will include tough decisions on top pay, on the costs of senior management and how local authorities organises their services.

"The public will not forgive local government if frontline services are hit when inefficiencies remain."

The PBR and this week’s smarter government paper (Putting the Frontline First) gives local government more tools to achieve efficiencies – and more flexibility and the potential in the future to generate new sources of revenue through renewable energy, trading and other means.

Ways of achieving efficiencies include:

  • Building on the Total Place pilots being taken forward across the country – which should ensure that spending by Government in local areas is more efficient, coordinated and tailored to the unique needs of communities.
  • Recasting the relationship between the centre and the frontline, by:

letting local areas set priorities and guide resources

reducing centrally imposed burdens on the frontline from reporting, inspection and assessment

making central government a more strategic partner by aligning and pooling budgets with councils

looking more closely at how central government supports the frontline to drive economic growth and inclusion at the local level

Giving local government more tools to shape their future and support growth also means powers to attract investment in their areas. The Government has already granted local authorities more powers to raise revenue to support economic and housing growth, such as the Business Rates Supplement.  Going further, it will examine the framework needed to implement Tax Increment Financing and will consider the primary legislation that would be needed if such schemes were to be introduced.

And it will examine the scope for local authorities to borrow against the revenue streams they create, such as through the Community Infrastructure Levy and energy savings initiatives like the Renewable Heat Incentive.

Housing Minister John Healey today also hailed steps in the PBR to offer continued help to homeowners and first time buyers.

Mr Healey said the Standard Interest Rate used to calculate Support for Mortgage Interest will be maintained at 6.08 per cent for a further six months. This increased support will continue to benefit around 220,000 homeowners during the recovery – helping to ensure the payments fully cover the interest for the greater proportion of borrowers.
And for first time buyers, funding for ‘Kickstart’ stalled developments will be used to help build 3,000 homes next year to be made available under the HomeBuy Direct scheme.  This is on top of the 10,000 homes already planned under HomeBuy Direct and will contribute towards the Government’s target of 112,000 new affordable homes over the next two years.

John Healey said:

"Today's announcement to extend help to struggling homeowners will be a welcome boost to over 200,000 families. This is part of the comprehensive package of support Government has put in place that has given peace of mind and much needed help to over 330,000 families so far during the recession.

"We will also continue to use the power of Government investment to support the construction industry – as we work towards economic recovery, developers cannot return to business as before.  So on top of the biggest council house-building programme for nearly two decades, we will explore new ways of cementing councils’ role, and also boosting housebuilders’ efforts to build greener homes.

"And through the Kickstart scheme to get stalled developments back on track, 3,000 affordable homes will be available through Homebuy Direct, helping first-time buyers get their first foothold on the housing ladder."

Mr Healey also confirmed further support for council tenants, as for the second year running the Government proposes to halve the guideline rents increase for council housing tenants for the coming year.  Under the Government’s proposals, rents would remain affordable and well below market levels in the continuing difficult times. This means that the consultation on guideline rents for 2010- 11 will be for an average of 3.1 per cent, rather than the 6.1 per cent previously agreed with local authorities.

Notes to editors

The key elements of today's PBR statement for the department and for local government and housing include:

On Total Place:

  • A 'Total Capital' approach to working with other Government departments to better align capital investment;

    On local financial freedoms:

    • A commitment to examine, subject to the overall fiscal position, further finance mechanisms, powers and flexibilities which could support local authorities to drive growth and innovation.
    • A commitment to examine the framework and legislative changes that would be needed to implement Tax Increment Financing;
    • A commitment to examine the scope for local authorities to borrow against future CIL revenues, Renewable Heat Incentives (RHI) and Feed-In Tariffs (FIT), and revenues from new council house building (where this offers value for money).

    On local government efficiency:

  • Savings of £2.6bn from local government by 2012-13.

    On free school meals:

    The Government will extend free school meals to primary school children in low earning households. This will be rolled out to up to 50 per cent of eligible children in September 2010 and then fully rolled out during 2011. £120m will be provided to Local Authorities in England in 2010-11 as unringfenced grant by Communities and Local Government.

    On regeneration:

    A joint CLG/HM Treasury led exercise to assess the efficiency and effectiveness of capital investment across Government of interventions to tackle worklessness and promote growth and inclusion in deprived areas. Best practice will be captured from case studies, including those led by the Homes and Communities Agency (HCA).

    On housing:

    • Expanding support for First Time Buyers through HomeBuy Direct;
    • A consultation document to explore ways to stimulate investment in the Private Rented Sector;
    • Enhancing the Government 's Surplus Public Sector Land Programme and the HCA's Public Land Initiative to stimulate/speed delivery of new, quality homes on centrally-owned surplus land;
    • Study of barriers to growth which seeks to understand key future drivers of house building construction and identify steps Government and industry could take to improve diversity and innovation;
    • Manage regulations on house building so that they do not unduly constrain supply – ensuring that the contributions developers are asked to make for  infrastructure and affordable housing are more transparent, proportionate and supported by viability assessments.

    On Business Rates:

    • To further support businesses in the current economic climate, the Chancellor announced an extension and increase of the temporary threshold below which empty properties are exempt from empty property rates.
    • The Government has also removed the requirement for businesses to re-apply for Small Business Rate Relief ( SBRR) , which reduces rate bills by up to 50 percent,  in the upcoming new revaluation period. This will remove a layer of bureaucracy from small businesses.
  • Contacts

    NDS Enquiries
    Phone: For enquiries please contact the above department
    ndsenquiries@coi.gsi.gov.uk