Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by Westminster City Council (LGB 22)

1.  CAPITAL FINANCE

Westminster City Council's View

  Westminster City Council warmly welcomes the capital finance proposals. The City Council has for some time argued for local authorities to be given greater freedom to borrow to finance capital expenditure, where they can afford it. These proposals would deliver this freedom and are in line with the ongoing dialogue between the government, the local government associations, CIPFA and others about a new system of capital finance. Westminster City Council also supports the development of a CIPFA Prudential Code for Capital Finance in local authorities, which will underpin the proposals. However the Secretary of State will have wide powers to make new regulations and orders and this brings as always the risk of undue prescription developing in secondary legislation. The draft Bill also gives the Secretary of State powers to re-introduce many aspects of the current control regime.

  The City Council is concerned by the fact that the Bill does not include clear indications of what form Government support for capital investment will take and how the affordability of borrowing will be judged.

  The new local freedoms could be constrained by the proposed measures to deliver government support via revenue and capital grant.

  The City Council regrets the fact that there is no indication of any changes to the regulatory control on local authority controlled companies.

2.  FINANCIAL ADMINISTRATION

Westminster City Council's View

  With the exception of the easing of the section 114 regime, which is welcome, the City Council considers that these provisions are unnecessary. Westminster City Council is not convinced that there is a need for new statutory powers to specify the level of local authorities' reserves or to monitor budgets. The change in date for accounts closure has not been included in the draft Bill.

3.  FORMULA GRANT

Westminster City Council's View

  The City Council is opposed to this proposal as it does not add to transparency. The Council believes that the separate identification of NNDR is important, particularly in the context of a local council's discussions with its business community.

  Westminster City Council believes that the localisation of the business rate is a favoured way to address the balance of funding and we feel that this proposal takes us further away from this objective.

4.  BUSINESS IMPROVEMENT DISTRICTS

Westminster City Council's View

  Westminster City Council believes that BIDs are a useful development to finance town and city centre improvement. Our experience in partnering the private sector jointly to fund such improvements shows that it is the land owners, not the occupiers, who are more willing to contribute.

  The Bill and other supporting legislation should make their engagement in BIDs explicit, together with the role of residents.

  Given the City's experience of the SRB funded BIDs in Central London it is clear that the effectiveness of any BID will depend on the detail of the forthcoming legislation and of the supplementary guidance on various technical issues. These matters should include the operation of the BID and the practical involvement of residents and businesses in their origin and development.

5.  NON-DOMESTIC RATES

Westminster City Council's View

  The City Council welcomes the proposal for rate relief for small businesses for which we have lobbied for several years.

6.  COUNCIL TAX

Westminster City Council's View

  Westminster City Council welcomes the proposed changes to the council tax. The City Council has long argued that the success of the council tax depends on it being seen as a fair tax. For this to be achieved, it must be kept up to date. There have been considerable changes in relative property values since 1991 when the existing council tax bands were set and we support the intention to hold a new revaluation in 2005 and regular revaluations thereafter.

  The City Council also believes that to improve the fairness of the council tax and enhance its long-term stability the number of council tax bands and the ratios between them should be reviewed, and consideration should also be given to the introduction of a system of regional banding for the council tax.

  The City Council welcomes the fact that the legislative basis of the council tax benefit subsidy limitation scheme, under which local taxpayers had to meet the additional costs in benefits of council tax rises above a certain threshold, will be abolished.

  The City Council is disappointed that there is no reference to the proposal to give local authorities discretion to remove the council tax discount for second homes and to retain the proceeds for local use and would hope that it will be included in the final version of the bill.

7.  HOUSING FINANCE

Westminster City Council's View

  The City Council has always strongly opposed the inclusion of rent rebates within the HRA and therefore welcomes the fact that legislation is finally being introduced to permit this. It will also simplify the procedure for paying housing benefit subsidy to local authorities in England since the responsibility is currently shared between ODPM and DWP and it will enable the National Assembly for Wales to exercise the powers in relation to Wales.

8.  POWERS TO CHARGE AND TRADE

Westminster City Council's View

  The City Council is supportive of the new generic power to charge for discretionary services. However, the Council considers that the statutory provision should not be subject to regulations as is now proposed. The previous charging powers in section 150 of Local Government and Housing Act 1989 were never effectively used because of the need for regulations to be made to bring into force those charging powers, and more importantly there is no need to have regulations limiting the amount that can be charged for discretionary services. As charges will relate to discretionary services the person to whom the services are made available or provided will have the choice as to whether to use those services and whether he wishes to pay the proposed charge for those services. This will provide a far more effective control mechanism than any regulations made by the Secretary of State.

  If a service does not have to be provided at all there is no logical reason for a limitation to be placed on a charge for providing that service.

  The Government consulted last year on proposals to extend powers to trade through an order under Section 16 of the Local Government Act 1999. No order has yet been laid, in part because the limitations of Section 16 have frustrated progress on some of the proposals.

  The City Council welcomes the fact that this clause improves on section 16 by conferring wider powers to permit trading, and making orders under this power subject to the negative resolution procedure, which is much less lengthy and cumbersome than the procedure for orders under Section 16.

9.  PERFORMANCE CATEGORIES AND BEST VALUE

Westminster City Council's View

  There is a certain amount of frustration at the relative lack of progress in making promised freedoms and flexibilities available to councils. The important thing now will be to identify additional worthwhile freedoms and make them available for councils to use.

  The City Council opposes the classification of authorities through CPA. This is an unnecessary scheme and the City Council will ask the Government to reconsider the introduction of the scheme.

  It is noted that the draft Bill does not increase any provisions to streamline the Best Value regime.

10.  LOCAL POLLS

  The Bill confirms councils' power to conduct an advisory poll (or referendum) on matters relating to the services for which the council is responsible or the finance it commits to those services.

  The City Council welcomes this clarification—as far as it goes. Local referenda can be a useful mechanism for councils (in pursuing their role as community leaders) to promote local debate or gauge local feeling on important matters affecting the well-being of the local community. It is disappointing that, having taken this opportunity to clarify a council's powers to conduct advisory polls, the proposal does not extend to these wider circumstances.

11.  GREATER LONDON AUTHORITY (GLA)

  The Bill highlights that there are unresolved issues on the detailed application of the proposals to the GLA. These issues need to be urgently addressed.

12.  NEW POWERS FOR THE SECRETARY OF STATE

  The City Council is concerned that the Secretary of State will be given new and wide ranging powers under the draft Bill.


 
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Prepared 8 July 2002