Councils judged to be 'excellent' performers will be free from ring-fencing restrictions
Councils across England are braced for the results of the government's most far-reaching review of their performance so far.

The Comprehensive Performance Assessment results will be revealed by the Audit Commission by 12 December – a week today. The findings could at last allow high-performing councils greater freedom to invest in housing, and, over time, greater borrowing powers.

Assessments will eventually be issued for all councils, but initially will only cover 150 unitary, county, London borough and metropolitan councils.

Last week, alongside the Local Government Bill, the government announced a package of "additional freedoms and flexibilities" that will be made available to local authorities on a sliding scale, depending on their CPA rating.

Councils assessed as "excellent" will benefit from the removal of revenue ring-fencing from 2003/04, which should give them more power to decide how they control their budgets.

Gwyneth Taylor, Local Government Association programme manager, said that although the number of councils involved would be small, there was nothing in theory to prevent high-performing councils from spending additional amounts on housing.

She added: "In effect the government is saying it will take the controls off an authority. From then on it will be allowed to make its own decisions on how it spends its money."

Councils not rated as "excellent" should see a reduction in the proportion of total government grant that is ring-fenced for services, from 12.4% to below 10%.

Despite initial confusion among some councils, it is understood that the Housing Revenue Account will not be affected by this change and will remain ring-fenced.

Neil Litherland, Camden's director of housing, said that in practice the direct financial benefits for housing would be limited. He said the removal of ring-fencing would only free up money after time, and that councils would have to wait for the introduction of prudential borrowing before more substantial sums became available.

Plans for prudential borrowing – which will allow councils to borrow against their income stream – are included in the Local Government Bill. The bill will come before parliament next year.

Source

Housing Today