Are Developers the Answer to Council Financial Woes?
The issue of Local Government Funding has been in the press this week, as reports show that Councils throughout the country are struggling with the prospect of protecting crucial public services for those communities who need them, while facing ever tightening budgets.
The way Local Government is funded is changing dramatically. The Central Government Grant is being ‘re-thought’ or scrapped if you are feeling pessimistic. In place of the old grant from Westminster will be the retention of new business rates, although the details have yet to be specified.
Clearly, there is a great deal of uncertainty for Council Leaders and Finance Directors, especially given the wider economic issues as well. One local authority area was famously reported to have sought assurances from the Government following the Brexit vote, that their planned investment from Europe will be replaced by more money from Whitehall. And yes, the area in question did vote overwhelmingly in favour of Brexit.
It’s an incredibly daunting task for Council Leaders to have to find a solution but there is potentially some salvation through devolution arrangements. However, at present, there are only a few areas successfully progressing devolution agendas.
Other Councils, particularly, but certainly not exclusively, in the capital, have picked up on the requirement for new housing as a possible salvation. Simply put, Council Leaders can build their way out of financial difficulty. More residents equals more revenue, which leads to more security for key services. Developers looking to bring forward sites for new homes across the country, from inner cities to leafy villages, needs to tap into the provision, and even expansion of services, upon which these communities rely.
Cratus Deputy Chairman Chris Roberts was Leader of the Royal Borough of Greenwich for 14 years. During the recession, Chris could open new community facilities and protect the crucial services from closure by attracting investment in the form of new homes. This is a solution that has been proven to work. The development industry needs to strongly advocate the need for housing, not just for the sake of new housing, but for the future stability of Local Government itself.
Therefore, while there are clear pressures which may be prevalent from the changes to Stamp Duty and from uncertainty following Brexit, forward thinking councils are increasingly likely to want to see new development which can grow their Council Tax base.