NALC warns parish capping will damage communities

The government is planning to bring in new rules forcing local councils to hold costly local referendums over increases to the parish precepts.

These proposals labelled as “a centralist sledgehammer to crack a nut” by the National Association of Local Councils (NALC) which will “damage communities and local services as well as undermining the role of local councillors”.

The national body represents England’s 10,000 local councils and over 80,000 councillors and has issued this stark warning ahead of a consultation on local government finance expected to be published tomorrow (Thursday 15 September) by local government minister Marcus Jones MP.

The consultation paper from the Department for Communities and Local Government (DCLG) makes proposals to bring local councils in line with principal councils by requiring them to hold a referendum if they plan to increase their part of council tax above a certain amount, with the effect of introducing ‘capping’ for the first time.

The limit for principal councils – who spend around £100 billion a year – is currently 2%, with an additional 2% recently introduced to allow them to generate new income for social care costs.

In many cases the costs of holding a local referendum to ask local people if they support an increase in parish spending will run well into thousands of pounds, often wiping out the proposed increase.

Unlike principal councils, local councils do not receive grant funding from central government or a share of business rates and are primarily financed through the parish precept.

Cllr Ken Browse, chairman of NALC said: “This really is a centralist sledgehammer to crack a nut, at a time when government should be supporting not undermining councillors and their important role in communities.

“This move, costing upwards of £1 million, will seriously damage smaller communities ability to help themselves and threaten the government’s previous commitments to localism and devolution.

“Local councils are doing a brilliant job improving their areas; whether it’s by building community resilience, increasing house building through neighbourhood planning, providing local transport solutions, supporting the local economy and businesses, organising community events and festivals, helping meet social care needs and making places dementia friendly or giving grants to help local groups and organisations – all this and more for an average cost to residents of just over a pound a week.

“Our councils account for just 1.7% of the £26 billion raised through council tax in England and have demonstrated fiscal responsibility in recent years with overall increases in precepts going down, rising this year by just 6 pence per week as a result of local councils taking on services from principal councils and funding not being passed on to them.

“It is vital local councils continue to have the freedom and flexibility to raise the resources they need to invest in local services, especially at a time when they are taking on services and assets from principal councils, often much valued services which would otherwise cease completely and which communities want to see continue.

 “Given their important and growing role, local councils should be celebrated and supported, not hindered by central government.

“While we will be opposing these plans very strongly, I am keen to work with the government and help them understand the impact of these proposals which will damage communities and local services as well as undermining the role of local councillors”.

The Local Government Finance Settlement Technical Consultation has just been published and is available here. 

A written ministerial statement is also available here.