The Problem Of Funding Your Local Government

The Problem Of Funding Your Local Government

There is a major problem facing the future of Local Government funding, that is there may not be enough for it. The Local Government Association predicts that if current central government policies continue they could be facing a funding deficit of 1 If spending reductions follow a similar pattern over the next five years, councils will be facing a £12.4bn funding gap by the end of the decade.

The old patterns of funding just don’t work anymore and there seems to have been an emphasis on accumulating funds by indirect taxation which has raised the ire of the people the Local Government are supposed to be providing services for. Yes, there is a great temptation to look at closing the gap by using the lucrative system of fines and penalties from all sorts of misdemeanours. Unfortunately there are councils that have fallen for this short sighted and short term solution but I would suggest that all it does is reduce the chances of re-election for councillors and makes the council less of a service provider and more of an enforcer.

But, somehow , there has to be a solution to ensure councils are can get the funding to deliver the services they are employed by the residents to provide. They can no longer look to central Government, that much is plain, and they should not look at extracting more from the residents and businesses they serve. So how do they get this funding? Lets’ look at what I consider the four main possibilities to generate funds and save money.

This needs a twofold approach, deliver energy in the form of electricity and heating at a cost that is reasonable and ensure that as much of that energy is retained and not wasted. This will require smarter options for energy conservation and much easier routes for energy generating installations. This does not mean that the councils need to look at funding this, they simply need to put in place simple and effective policies that enable companies and individuals to bring the energy producing and conserving systems into the community. Permitting should be streamlined with an attitude of coming from a position of a desire that all applications which save money and energy are approved in the quickest possible time.

Since this is within the jurisdiction of town planning and building permits perhaps the Australian system could work as well here as it does in Australia. In brief, all permits in Australia are reviewed by licenced contractors, so when a plan is submitted to council it has already been vetted to ensure compliance and the council just rubber stamps it. The licences are very valuable commodities easily lost if a faulty or bad plan is submitted to the council. Licenced contractors guard their licences jealously.

Councils hold a wide range of assets, both soft and hard. Hard assets being buildings and land etc. Soft assets being rights and privileges held by or controlled by the council. As the LGA says, “You can only sell a building once”, and raising funds by selling off council assets is never a good idea. There needs to be smarter use of the assets by turning them into revenue generating business units that are owned by the council and therefore return the profits to the council.

It is unfortunate that waste is still seen as an expense, a service that has to be provided by the council at a cost to the resident. That paradigm is simply not true. Our modern technologies now make waste an asset which can be collected free and sold with all costs of collection covered by the sale. Incorporating this with a council owned commercial entity dealing with the waste also means that profits return to the council and then go into the coffers for other services.

Again there needs to be a paradigm shift here. Britain’s towns and cities are terribly inefficient in the way they handle traffic and public transport. But then a massive revenue is generated by this inefficiency. Councils must re-think how they approach traffic management, from the phasing of traffic lights to the highly restrictive nature of Britain’s road system, with its millions of bollards, islands and just plainly unbelievable road layouts. Some lateral thinking in this area, as well as public parking, could work wonders and save an incredible amount of money.

That is just an outline of four sectors, but they are, we believe, the ones that are key to reducing council costs and generating revenues.

For more information about Local Government Future Funding please follow this link.

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