Written evidence submitted by Tunbridge Wells Borough Council [FFL 015]
- Thank you for the invitation to submit evidence to the Select Committee’s inquiry into ‘Levelling Up’.
- We suspect that Tunbridge Wells Borough Council (TWBC) might have been invited because of the suggestion that the government has changed funding formulas to benefit areas like Tunbridge Wells.[1]
- As this submission will demonstrate, this has not been our lived experience. The Submission also sets out our views and experiences of various funding streams that have sought to promote economic development and ‘levelling up’ and the relationship between central and local government in looking to deliver sustained and meaningful investment to improve the prosperity and life chances of residents and to reduce inequalities within and between local areas.
Recent history of central government funding
- Local government has experienced some of the deepest cuts of any part of the public sector as this chart from the IFS demonstrates.
- Whilst Tunbridge Wells is undoubtedly an affluent Borough, we feel it is important to emphasise that the average earnings of residents does not relate to or correlate with the resources available to the Council. Tunbridge Wells has the third lowest ‘core spending power’ in Kent despite providing one of the widest ranges of services within Kent and operating with some of the highest costs and cost-drivers in the county (local wage levels, high percentage of planning constraints etc).
- TWBC has also, from 2010 to 2018, seen the complete removal of its Revenue Support Grant from Government and, with one of the lowest Council Tax rates in the county and double-digit inflation adding hundreds of thousands of pounds to contract costs, it is facing significant budget shortfalls and will be below its minimum reserve position within 18 months.
- With Council Tax linked to the value of properties over thirty years ago (two years after the Berlin Wall came down, when Chesney Hawkes topped the charts and when you could buy a pint of beer for £1.30) the value of properties in Tunbridge Wells for Council Tax purposes is lower than parts of East Kent. It is also the case that whilst the Council Tax system was designed with the ‘standard’ dwelling being in Band D, most properties in Tunbridge Wells are in Band C and over a third of properties in the Borough benefit from a Single Person Discount. Council Tax bands have changed very little compared with the prices of houses. The most expensive house in the Borough will pay only three times the rate of the smallest one-bedroom bedsit despite the actual difference in values being nearer fifty times greater.
- The austerity programme that was pursued from 2010 significantly reduced Tunbridge Wells BC’s (and many other local authorities’) investment in promoting growth and economic development. The subsequent further erosion of our spending power has resulted in local government services increasingly being limited to, or concentrated on, those areas that we have a statutory duty to provide. Shortfalls in councils’ budgets combined with recent experience of Brexit, Covid and inflation increasing the costs of past projects, coupled with pessimism about future funding and inflation is also leading to the loss of a ‘growth mindset’ in which local authorities are focused on cutting costs and eschewing projects and initiatives that could result in growth and levelling up but which could equally become unaffordable given fears about our future financial and operating environment.
Funding for economic growth and levelling up
- There is a long history of funding from central government or the EU to promote economic growth and levelling up. We would absolutely endorse the acknowledgement in the Levelling Up White Paper that the proliferation of multiple competitive pots over the last decade has led to fragmentation, inefficiency, complexity, and administrative burdens. We have included as an appendix our experience of bidding for funds over the past five years. In contrast to the suggestion that Tunbridge Wells has been favoured by changes to funding criteria, you will see that we have only been successful in one competitive funding bid for a local cultural centre (that was experiencing acute cost pressures as a result of Brexit, Covid, inflation and supply chain issues). That project was originally ranked 11th out of 29 projects but was funded because no other project was able to spend the funds within the (very tight) timescales specified. In respect of the Levelling Up Fund, Tunbridge Wells was (unsurprisingly) ranked as being in the lowest priority tier so did not receive funding.
- As you can see from the appendix to this submission, over the past five years, we have been invited to bid for no fewer than seven growth/levelling-up related funds (Local Growth Fund, Getting Building Fund, Community Renewal Fund, Levelling Up Fund, UK Shared Prosperity Fund, Rural England Prosperity Fund, Investment Zones) – an average of more than one a year. Each fund has different eligibility and bidding requirements and reporting requirements whilst all being aimed at promoting economic growth and prosperity. We would be most surprised if any Local Government Minister would be able to name and describe the various pots and schemes that have been announced over the past few years and account for their success.
- SOLACE (the Society of Local Authority Chief Executives) has estimated that more than £7bn has been allocated to councils through one-off funding pots since 2010, with a growing trend since 2018. They estimate that, on average, it costs councils £20,000-£30,000 per bid and that councils can lose hundreds of hours of staff time preparing the required documentation. They note NAO conclusions that this “creates risks for value for money as it encourages short-term decision-making and undermines strategic planning”. We would echo and endorse these points.
- A really important point to make is that economic development, regeneration and ‘levelling up’ take time, yet funding mechanisms chop and change and wax and wane. As with businesses, local authorities need a predictable operating environment if they are to increase and sustain investment into promoting growth. A great example here is the ‘New Homes Bonus’ scheme that was set up with five aims: to be powerful, simple, transparent, predictable, and flexible. In practice, the scheme changed swiftly and frequently. The National Audit Office found evidence that it provided a ‘powerful incentive’ and that it was ‘simple’, ‘transparent’ and ‘flexible’ but found less evidence that it was predictable.[2] This was our experience too – within four years of being introduced, the Government was consulting on significantly reducing the period over which the ‘bonus’ was paid and reducing payments through the introduction of a ‘deadweight’. Because plan making takes time this means that the scheme effectively acted as a windfall for those authorities that already had applications in the pipeline and those that changed their planning policies and approaches in response to the ‘incentive’ did not benefit. It also means that some of the expected income was no longer received – effectively a retrospective funding cut.
- A similar picture holds true in respect of the Business Rate Incentive Scheme which started off as the ‘Local Authority Business Growth Incentive’ scheme and which has been subject to several changes and unfulfilled promises since that time. As part of the scheme, local authorities are also responsible for lost income as part of appeals which included reimbursing sums paid before the scheme went live which meant that government benefitted from the initial payments only for local councils to repay any sums due because of the (frequent) revaluations.
- In short, government funding schemes to promote growth and levelling up start, change and stop with bewildering frequency and severely limit local authorities’ ability to plan and manage growth over a sufficient period.
Cross-departmental working and reflections on bidding processes
- A most compelling review into how growth and levelling up can be encouraged is Lord Heseltine’s Report: ‘No Stone Unturned’.[3] The report concluded that the Government had set itself up as a ‘functional monopoly’ relegating local authorities to service providers (‘Whitehall’s branch offices’). It noted too many decisions are taken in London without a real understanding of the particular and differing circumstances of local communities and that it prevents a holistic look at the full range of issues facing a particular area. He identified over £49bn of funds that could be allocated to local places over a four-year period. The Local Growth Fund that was finally established was for less than a quarter of this (over a five-year period).
- Our experience, since we have experienced the complete loss of our formula grant for local services, is that funds seem to emerge from a range of government departments for a range of purposes (set out centrally within Whitehall) and that they are accompanied by onerous application and reporting processes. The funds are frequently announced late in the day, with a short application window and are often announced before the criteria are set. Where funding criteria are provided, they are frequently subject to change. Two recent examples of small centrally-set pots are the announcement of a £10m fund to ‘support councils remove chewing gum from our streets’[4] (something that local authorities are hardly unfamiliar with) and a £20m fund to ‘tackle rogue landlords’.[5] Councils are also called upon with alarming (and increasing) frequency to step in to manage problems being caused by (or within) other sectors. For example, as part of the response to the cost-of-living crisis, it was determined that payments should be made to Council Tax payers which took a huge amount of work to design and implement the scheme: Council Tax systems are set up to bring money in not to pay it out and we had particular issues with the fact that many residents pay by cash (which means we do not have their bank details) and the process took staff away from other priorities including processing benefits and promoting economic growth.
- This approach that sees multiple one-off pots being channelled in the direction of local government without any coherence, longevity, understanding of local communities and with associated burdens associated with applying and reporting back (both in Whitehall and the Town Hall) is clearly inefficient and suboptimal.
Investment Zones
- All of the above could not be better encapsulated by the recent proposal to introduce ‘Investment Zones’. Several councils were approached to consider bids for Investment Zones with no answers to any questions about what they were for, what benefits they would bestow, how they should be applied for, how they would be assessed or how many would be implemented.
- Even after the scheme was announced, officials were unable to provide substantive answers to our questions, the application form was withdrawn from the government’s website (and replaced with a ‘request to receive an application form’ form) and we were left with a window of less than a fortnight to make bids. Even within this window, advice on how to apply and what criteria would be assessed continued to change. In Kent, those who submitted applications ended up working through evenings and weekends only for the government to have announced that existing expressions of interest will not be taken forward.
- These constant false dawns, stop/starts and constant changes to existing schemes erodes trust and confidence in the next scheme or initiative that is launched.
Summary and Conclusion
- Tunbridge Wells is twinned with the German town of Wiesbaden. When we talk to our peers in Wiesbaden and elsewhere around the world, they are thoroughly bemused by how little local discretion councils enjoy locally and by how heavily control is weighted towards Westminster. Government decides how much we charge for a planning or licensing application, how much we charge for parking fines and the amount by which we can increase Council Tax. As a consequence, UK local authorities perform sub optimally in terms of ‘place-shaping’, driving economic growth as well as turnout at local elections (which is surely a consequence of the lack of local powers and control). There are 40 nation states in the world that have a lower population than Tunbridge Wells Borough and 81 nation states that are smaller than the county of Kent yet local authorities continue to remain ‘chained to the radiator’ in terms of their local discretion and capability to act for the benefit of their communities.
- Whilst the Committee’s work is focusing on ‘Levelling Up’, this cannot be separated out from the wider approach taken to drive growth and promote local economic prosperity. In our view the approach taken over the past few decades has been inefficient, ineffective, and administratively burdensome. There is no shortage of reports including myriad reports from this Committee, policy experts, reviews, and White Papers; the missing ingredient seems to be political will to implement these recommendations and to see them through – providing councils with a stable and predictable operating environment and local discretion to act.