Councils given 1% extra council tax flexibility

Communities secretary Sajid Javid has announced that councils will be able to increase council tax by an extra 1% without triggering a referendum, as he unveiled the draft local government finance settlement for 2018-2019.

Mr Javid told the Commons: 'It will mean total core spending power this year financial year, which was £44.3bn, will rise to £45.6bn by 2019-20 and it is an increase in real terms in core spending power in each of those two years.'

However the chair of the Communities and Local Government Select Committee, Clive Betts MP, said figures from the Local Government Association suggest that even if the extra flexibility is fully realised it 'will raise just £250m next year whereas the LGA estimate a shortfall in social care of £2bn'.

Mr Javid said: 'We also need a long term solution to the challenges that are not going away. That's why we have already announced a green paper on the challenges of adult social care will be published in the summer of 2018.'

Striking a conciliatory tone, he said he had been persuaded of the need for continuity and certainty on the New Homes Bonus (NHB), which is set to pay out £946m in payments in 2018-19.

'I consulted on proposals to raise the NHB baseline and link payments to the number of successful planning proposals. Following conversations I have been pursauded of the importance of continuity and certainty in this area. In the year ahead, no new changes will be made to the way NHB works and the baseline will be maintained at 04%.'

Mr Javid also revealed that planning departments will be able to raise planning fees by 20% provided they commit to spending the cash on their services.

He confirmed that the aim is for local authorities to retain 75% of business rates from 2020-21.

'This will be through incorporating existing grants into business rates retention, including the revenue support grant and the public health grant.'

He added that 100% business rates retention pilots will continue, with a new pilot set to begin in London in 2018-19.

He added further waves of pilots there would take place in Berkshire, Derbyshire, Devon, Gloucester, Kent and Medway, Leeds, Lincolnshire, the Solent, Suffolk and Surrey.

Mr Javid said: 'To meet the challenges of the future we need an updated and more responsive distribution methodology one that gives councils the confidence and opportunities to face the challenges of the future.

'Today, I am publishing a formal consultation on a review of relative needs and resources. I aim to implement a new system based on its findings in 2020-2021. Alongside the methodology in 2020-21 we will also implement the latest phase of business rates retention programme.

'Local authorities will be able to keep that share of growth on their baseline levels from 2020-21 when the system is reset. From 2020-21 busienss rates will be redistributed according to the outcome of the new needs assessment subject to suitable transitional measures.'

He also confirmed DCLG increase the Rural Services Delivery Grant by £15m in 2018-19, meaning that the total figure will remain at £65m for the current four-year settlement.