Government to continue with no referendum principles for local councils

The government’s provisional local government finance settlement has confirmed the continuation of no referendum principles for local (parish and town) councils in 2021-22, which the National Association of Local Councils (NALC) has called for and was included in their submission to the recent spending review.

The relevant section is on page 12 of the consultation document:

“In 2018-19, the Government announced that it did not intend to set referendum principles for town and parish councils for three years. This was contingent on the sector taking all available steps to mitigate the need for council tax increases and the Government seeing clear evidence of restraint in the increases set by the sector.

In 2020-21, the average Band D parish precept increased by 4.0%. This was the lowest percentage point increase in parish precept since 2012-13 but remains in excess of the rate of inflation.

In the expectation that parish and town councils continue to show restraint when setting council tax precept levels, the Government proposes to continue with no referendum principles for town and parish councils in 2021-22. The Government will take careful account of the increases set by parishes in 2021-22 when reviewing the matter ahead of next year’s settlement.”

Total precepts in 2020-21 is £596million, with year on year increases to average Band D precept going down, rising by 4.0% or just over 5 pence per week in 2020/21 to an average of £69.

NALC will be responding to the consultation to welcome this proposal, also taking the opportunity to highlight the continued financial pressures placed on local councils from Covid funding to the local government not being available to local councils. The final settlement is expected to be published in late January/early February and debated and agreed by the House of Commons.

Cllr Sue Baxter, chairman of NALC, said: “England’s most local authorities – the 10,000 local (parish and town) councils – have stepped up to be at the forefront of supporting their communities during the pandemic. It is therefore good that the provisional local government finance settlement proposes no referendum principles for local councils in 2021-22.

“I am pleased the government has listened to our call for continued flexibility and autonomy beyond the three-year deal which ended this year. This will allow local councils to continue to lead their places and invest in community services and priorities through their small share of council tax without a referendum on increases.

“Due to good financial management and financial resilience, most local council budgets have been able to cope with the impact of the pandemic. Yet some local councils, especially larger councils such as town councils, continue to face significant financial pressures through lost income and have been largely excluded from government support.

“Around £10 billion has been provided by the government to principal councils, with £6 billion un-ringfenced to give flexibility in meeting pressures in their local area, including those faced by local councils. It is therefore disappointing that local councils are still not receiving any this funding – despite encouragement from the government to principal councils – and they remain not eligible for the Income Compensation Scheme covering lost sales, fees and charges.

“Many local councils will be facing tough decisions as they set their budgets for next year on using this council tax flexibility to offset reductions in income to ensure they can continue to provide valued local services, facilities and projects which help improve quality of life. I will continue to work positively and constructively with the government to ensure local communities get the financial support they need.”