Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 12
12
Deferred
Over-reliance on ringfenced funding reduces local authority efficiency and decision-making.
Conclusion
Successive Governments have relied too much on ringfencing of funding to control the activities of local government. Through ringfencing, the Government has required local authorities to spend their money in specified ways, which may not be the most efficient use of that money in the local context. Local authorities would be able to make more use of their local knowledge and make better decisions within their local context if the Government used an outcomes-based system: rather than requiring local authorities to spend specific amounts of money in certain ways, requiring local authorities to achieve certain outcomes within their overall budget. (Conclusion, Paragraph 61)
Government Response Summary
The government's response focused on the roles of various departments in the local tax system and plans to move the Valuation Office Agency into HMRC, without addressing the recommendation to move away from ringfencing to an outcomes-based system.
Government Response
Deferred
HM Government
Deferred
41. Ministry of Housing, Communities and Local Government (MHCLG) Ministers and officials already work very closely with those in His Majesty’s Treasury (HMT), each playing different, important roles within the system of local taxation. HMT has oversight of the UK tax system as a whole and responsibility for strategic tax policy and policy development including the setting of tax rates and most reliefs. MHCLG holds relevant primary legislation and is responsible for ensuring the effective administration and operation of the local tax system, including policy maintenance, stewardship and implementation. 42. The Valuation Office Agency (VOA) is an executive agency of His Majesty’s Revenue & Customs (HMRC) and is responsible for the valuation of domestic property for council tax, as well as non-domestic property and land for business rates in England and Wales. The VOA also deals with valuation checks and challenges, while the independent Valuation Tribunal for England handles appeals. The Government has announced plans for the VOA to become part of HMRC to increase efficiency, business experience and ministerial accountability. This will improve the experience of taxpayers and businesses by cutting the time spent managing taxes, and strengthen political oversight, accountability, and delivery. 43. HMT and MHCLG will continue to work closely together to deliver on the Government’s ambition to reform the tax system by creating a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century, and to ensure that tax decisions that affect local government are considered in the round at fiscal events. The Big Pressures