Last week, Crawley Borough Council set its budget strategy for the coming year. The new strategy builds upon the one employed over the past year and remains true to the commitments outlined in Labour’s local manifestos.
Labour balanced last year’s budget and are on course to do so this year, but in recognising a spending decision taken in a single year can have major long-term consequences the strategy contains the flexibility to adopt a multi-year approach to reforming services if necessary.
We‘ve ruled out above inflation council tax increases and, instead of focusing on cutting services as the Government slashes our grant, we are working to find new ways to grow council revenue by investing reserves more effectively and bringing forward leisure opportunities people want to pay for.
In addition, our strategy outlines a sustainable approach to using the council’s capital resources and finances our ongoing programme of building genuinely affordable housing.
Last week I warned devolving control of business rates to councils might not be the boost people expect and having met with local government finance experts I am certainly pessimistic.
At present councils collect £23bn in business rates, with 50% retained by local government as a whole. Crawley collects considerably more than most and retains only a fraction, with the rest going to other councils. Under the new system the remaining 50% will also be retained by the sector as a whole, but Crawley will still not benefit from the vast majority of what it collects.
Local government already receives significantly more than £23bn per year, in addition to retained business rates councils currently benefit from £55bn of grants. So the Government can devolve all the business rates and still have room to cut council budgets by over half. We already know Revenue Support Grant—£9bn per year—is being abolished and other pots also look set to go.
So, the smart money is that councils will end up worse off at the end of this process than at the beginning and in the long run, that can only mean more cuts to services and higher local taxes.