Local Government Finances Parish Council Forum 17 th October 2011 Terry King Deputy Leader

Council tax Freeze 2011/12 – 2012/2013 The Council tax freeze for this year is funded by Central Government for 4 years. The support will end 2015/16. The level of support is over £500k, therefore in 2015/16 savings will have to be made or the tax increased to cover the loss. This would in addition to any pressures (inflation and service) felt in 2015/16. The Government have announced the option of a Tax freeze for 2012/13, but with only one years support. If this option is taken it means in 2013/14 that again a savings of £500k plus will need to be found or tax increased by that amount. Although this support can be good news it will cause problems. Some Councils get 75% of the funding from Government and 25% from Council tax, Rutland has 25% from Government and 75% from Tax. This makes it more difficult at the end of a freeze period.

Changes in the way Rutland will be Funded The Government has announced it is consulting on a change to the name given to its support for Councils. The new heading will be Business Rates (NNDR). When this change is made our level of funding will be frozen, so any unfairness will be locked in. The new system will only be reviewed every 10 years. Councils will have an incentive to grow the Business rates and keep a large part of any growth. Although Rutland collects around £9 million, and we currently get less in support through grants, when the change happens we will get the lower amount and the difference will be retained by Government to fund Councils with figure the opposite way around.

Other potential changes and Pressures The Government is consulting on a change in the way if funds the Councils central support for Education. It believes that now Academies are in place that Councils should need less funds. Rutland and other Councils are contesting the amount that will be withdrawn. The Benefit system is being localised and also the amount of funding will be cut, this may place pressure on Council tax and / or residents. The Government has a national plan for Broadband, but is only partially funding it. The expectation is that Local Government provides funds to match the Government, although most Councils are under pressure to provide more than just an amount needed to match the funding.

Summary - Current Position At the moment Rutland has a Medium Term Financial Plan which is sound for approx 3 years, therefore we have time to plan and implement any changes. Our funding level per head of population is about a third of Leicester City, and less than many other rural areas, therefore the freezing of the current funding levels is concerning. We have limited impact on Services from the last round of cuts, but that may have to change if further cuts result from the various consultations.