Poor targeting of Levelling Up Fund?

[The Ham]

What is the alternative for them?

Given the number of local authorities is this an issue for all of them?

Given that two large and historically well managed councils (Kent and Hampshire) have written to the government saying that they are likely to go bankrupt - then there's a good chance it's all of them which are finding it hard to cope with the cuts.

 

[DynamicSpirit]

Just increasing the block grants to local authorities in England would also cost less in administration than one part of the government constantly preparing bids and then another part evaluating them. Both jobs need to be done by skilled and highly paid staff, and plenty of councils will hire consultants to give them the best possible chance with their bids - can they be blamed for that? We could spend nearly all of that money on actual infrastructure rather than thousands of pages worth of electronic documents if we wanted...

But increasing the block grants wouldn't have the same effect. Given the pressures councils are under, it's most likely any extra block grant money would get eaten up on current spending - especially things like social care. I'm not saying that's not a good thing - I think there is a serious issue about council funding not being adequate for their legal responsibilities, but I don't think you can directly swap general council funding for specific programs like the Levelling up Fund that are designed to provide capital expenditure on individual projects.

 

[THC]

Indeed. That's precisely the mismanagement I'm accusing the government of.

== Doublepost prevention - post automatically merged: 22 Jan 2023 ==


To an extent the local authorities are in a double bind. The government imposes statutory duties on local authorities, which essentially takes out the majority of their budgets on thing like children's services or social care, or certain kinds of support for disabled people. But local authorities aren't permitted to raise more money through council tax except at the behest of Ministers. Most local authorities will be losing substantial funds next year in real terms because they aren't permitted to put council tax up by inflation. The government then does not like giving them devolution deals that include the authority to go to the market to borrow money. Nor does the Treasury favour repayable loans to authorities. The Private Finance Initiative or Public-Private Partnerships were sold as solutions, but they've rightly fallen out of favour for the vast extra costs that they can add over the lifetime of such restrictive contracts. Finally special investments in business aren't safe enough for most local authorities to take on, as they've found out to their enormous cost during the pandemic. As such they can work up great business cases for projects which then never get funding because they don't get the cash.

Not quite. Local authorities are permitted to raise council tax by up to 5% each year (up until this year it was 2% plus an extra 1% for upper tier authorities, i.e. those with social care responsibilities) without holding a local referendum. Any rises over this threshold are required to be confirmed by the electorate - and the chances of winning such a vote are slim at best, notwithstanding the political risks associated with such a move.

You're also mixing up a few other issues. Devolution deals do not need to contain authority for councils to borrow - this is covered by the Prudential Code, which does not cap the amount other than to say that authorities must not borrow in advance of need. This borrowing can be done at preferential rates from the Public Works Loan Board or by issuing municipal bonds, so no need to go to the markets. However, as councils have a legal obligation to balance the books year on year, any borrowing must be structured and for capital projects only - the revenue accounts must balance. This is where Croydon, Slough and now Thurrock have come unstuck, hence the issuing of section 114 notices to confirm effective bankruptcy.

THC

 

[Starmill]

Any rises over this threshold are required to be confirmed by the electorate - and the chances of winning such a vote are slim at best, notwithstanding the political risks associated with such a move.

I'm aware of this, but again this is instrumental in the double bind. The rules are set specifically for the purposes of defeating a local authority in a referendum, and thus to hold one would only be a waste of money.

== Doublepost prevention - post automatically merged: 23 Jan 2023 ==

Devolution deals do not need to contain authority for councils to borrow - this is covered by the Prudential Code, which does not cap the amount other than to say that authorities must not borrow in advance of need. This borrowing can be done at preferential rates from the Public Works Loan Board or by issuing municipal bonds, so no need to go to the markets.

Indeed but these facilities are entirely insufficient and too conditional. That's my whole point, as you neatly make for me in discussion about the threat of section 114. Indeed, the structure is primarily designed around giving councils "Hobson's choice" in an attempt to hold voters under the illusion that their council is responsible for the problems in their local area, rather than Ministers.

To summarise my point, councils and combined authorities simply don't have access to the necessary spending power to bring about the kind of change the government says they'd like to see, through any of the possible channels. This spending power is available but it is all concentrated in the hands of Ministers, and primarily just the First and Second Lords of the Treasury at that.

 

[THC]

I'm aware of this, but again this is instrumental in the double bind. The rules are set specifically for the purposes of defeating a local authority in a referendum, and thus to hold one would only be a waste of money.

You didn't appear to be aware of it when you wrote above "But local authorities aren't permitted to raise more money through council tax except at the behest of Ministers. Most local authorities will be losing substantial funds next year in real terms because they aren't permitted to put council tax up by inflation". As I demonstrated, this is not quite the case.

Indeed but these facilities are entirely insufficient and too conditional. That's my whole point, as you neatly make for me in discussion about the threat of section 114.

I fail to see how either prudential borrowing or the PWLB are "insufficient and too conditional" given the legal requirement for local authorities to balance the budget year on year. The PWLB's loan book, for example, is authorised to a ceiling of £115bn.

Indeed, the structure is primarily designed around giving council's "Hobsons choice" in an attempt to hold voters under the illusion that their council is responsible for the problems in their local area, rather than Ministers.

I think we can agree on this. Too often local government is used as a shield to deflect blame away from Whitehall. And that is because...

To summarise my point, councils and combined authorities simply don't have access to the necessary spending power to bring about the kind of change the government says they'd like to see, through any of the possible channels. This spending power is available but it is all concentrated in the hands of Ministers, and primarily just the First and Second Lords of the Treasury at that.

...despite the various rounds of devolution this century the UK has one of the most centralised systems of government of any mature liberal democracy. In that regard, second only to Ireland in western Europe. So it is seen by central government as only natural that Ministers retain control over as much of the public purse as possible while outsourcing the blame for shortcomings in policy and other decision-making.

THC

 

[Starmill]

You didn't appear to be aware of it when you wrote above "But local authorities aren't permitted to raise more money through council tax except at the behest of Ministers. Most local authorities will be losing substantial funds next year in real terms because they aren't permitted to put council tax up by inflation". As I demonstrated, this is not quite the case.

But it is the case. Local authorities are generally required to cut council tax charges every year under the current system because the cap is so frequently below inflation. The fact that Ministers allow a get-out with a referendum makes effectively no difference to their position. That's why I said "at the behest of Ministers". This year Ministers are graciously allowing the charges to go up by almost half the rate of inflation without an unwinnable referendum and expect to be thanked for that, which says it all.

== Doublepost prevention - post automatically merged: 23 Jan 2023 ==

I fail to see how either prudential borrowing or the PWLB are "insufficient and too conditional" given the legal requirement for local authorities to balance the budget year on year. The PWLB's loan book, for example, is authorised to a ceiling of £115bn.

Because many very good value for money projects can't be funded through them precisely because of this legal requirement. I would have thought that's obvious.

A very large number of good value for money bids have been rejected. They're now unlikely to be finding funding from an alternative source next year. The money spent writing and evaluating the bids which haven't been selected is a sunk cost, it brings no benefit. The projects could easily have all been funded in reality, it's purely a political choice not to.

 

[THC]

But it is the case. Local authorities are generally required to cut council tax charges every year under the current system because the cap is so frequently below inflation. The fact that Ministers allow a get-out with a referendum makes effectively no difference to their position. That's why I said "at the behest of Ministers".

Ah, I see the point you are trying to make. Had you added the words "in real terms" after "cut" then I would not have countered.

Because many very good value for money projects can't be funded through them precisely because of this legal requirement. I would have thought that's obvious.

Your wording suggested that it was prudential borrowing and the PWLB ("these facilities") that were insufficient so no, it wasn't obvious.

A very large number of good value for money bids have been rejected. They're now unlikely to be finding funding from an alternative source next year. The money spent writing and evaluating the bids which haven't been selected is a sunk cost, it brings no benefit. The projects could easily have all been funded in reality, it's purely a political choice not to.

I led one of the unsuccessful LUF bids and what will happen in my authority's case is that the underlying projects will go back on the shelf until alternative funding is found to progress them. One such potential alternative source - the Housing Infrastructure Fund - is expected to launch another round later this year. So the work won't be totally wasted, even if it failed to yield the desired dividend first time around.

THC

 

[Starmill]

Ah, I see the point you are trying to make. Had you added the words "in real terms" after "cut" then I would not have countered.

Sorry - in hindsight I ought have weighed the need for brevity against getting the whole of the point across more carefully!

 

[Sad Sprinter]

Of course its poor targeting.

You can't just close the economic gap with the South East by investing in a high street, you need to reverse the effects of deindustrialisation. Heavy industry is the only thing that is going to provide wealth to "The North". Qualifications are lower than the SE/East Anglia and land, generally, is cheaper. Perfect conditions for a revival in heavy manufacturing but our politicians for the past several decades keep getting starry-eyed over "hi-tech" industries, that employ a small number of highly educated people and don't mind the high land costs to do so. In effect, London and the South East.

The only way to restore heavy manufacturing to the UK is an interventionist government policy. But the Tories would rather lose an election than pivot to one and Labour probably don't care either way seeing, on a fundamental level, the basic psychology of the party is virtually identical to the Tory party - very little working class regional representation.