BusinessCompany NewsLocal government finance under scrutiny

Local government finance under scrutiny

The government is mounting a year-long review of local government finance amidst growing concern among ministers over soaring council tax bills.

Link: Green Budget: More powers given to councils

Local government minister Nick Raynsford announced the creation of a group of experts ‘to undertake a thorough examination of the way local finance is funded and the balance of that funding between local and national taxation’.

Raynsford said the outcome ‘will inform policy for the next ten years and contribute to our long term strategy of extending local freedom and raising the quality of service’.

He added: ‘Because of the complexity of the issue and the need to avoid turbulence in local authority funding it is unlikely that any dramatic changes will occur immediately.’

Local government association chairman Sir Jeremy Beecham said the review must examine how to free-up local decision making under a system than meant 1% of additional spending resulted in a 4% rise in council tax.

The review was born out of a desire to be seen to take action while chancellor Gordon Brown keeps the lid on all forms of local expenditure with the exception of education.

The crisis is partly the result of very large increases in some areas resulting from the last grant formula review.

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