The head of professional finance body the Chartered Institute for Public Finance and Accountancy (CIPFA) has called on the Chancellor to scrap the council tax freeze which currently costs local authorities £2bn a year.
In an open letter issued on the eve of today’s Autumn Statement, CIPFA chief executive Rob Whiteman pointed to figures compiled by the Institute showing income generated from council tax will be £2.2bn lower in 2013/14 than if it had been allowed to increase over the last three years at the average rate over the five years before this government came to power.
‘If the freeze grant continues into 2014/15 that figure will have grown to £3.2bn lost to local authorities, or a 13% cut in the value of council tax income,’ Mr Whiteman stated.
He also called on the Government to set up an independent grants commission into local government funding to ensure money is distributed according to need.
Mr Whiteman also urged the Treasury to give local authorities permission to build more housing to boost supply and reduce welfare bills.
‘If you made the decision to remove the blockages in the system to local authorities building new housing, it would boost the economy, cut the welfare bill and help towards resolving the housing crisis in the UK.’
Speculation is rife, however, that the chancellor will agree a Coalition trade off to increase housing borrowing limits in exchange for a further increase in right to buy discounts.
Reports suggest borrowing caps would not be scrapped in there entirety, but instead councils would be given grater borrowing headroom in areas of severe housing pressure.
Any borrowing would be in the forms of bids to Local Enterprise Partnerships (LEPs) and conditional upon meeting conditions such as committing to build new homes or improve estates.
Yesterday the Local Government Association urged Mr Osborne to let councils borrow under normal prudential guidelines to help support 60,000 housebuilds over the next five years.
The LGA also claimed at least nine councils with around 40,000 residents on housing waiting lists are unable to borrow any money to invest in new homes and pointed to current estimates showing 1.8 million households are on waiting lists nationally.
