by Struggling councils will no longer have to pay a premium on financial bailouts, Angela Rayner has announced in a speech promising to get local government “back on its feet”.
The Deputy Prime Minister compared the fee, which was a condition for local authorities seeking emergency support under the previous Tory government, to a “payday loan”.
A total of 18 councils were given an injection of money from the government in February to ensure they could meet their legal duty to balance their books in 2024-25.
Bailouts are usually provided through this exceptional financial support (EFS) framework in the form of a “capitalisation directive”, which allows authorities to use capital funds raised through borrowing, or the sale of assets such as buildings, to finance from day to day. services.
Previously, they were charged an additional one percentage point premium on the interest rate, above the rate the loan would otherwise be subject to, if they drew down on the loan.
Speaking to the Local Government Association on Thursday, Ms Rayner criticized the previous Conservative administration for leaving councils “stuck in a doom loop” with “money pouring out of a system that has too many cracks”.
The Cabinet Minister, who also acts as Local Government Secretary, said: “It’s going to be a long, hard time getting local government back on its feet.
“And in the short term we’re doing our best to protect councils that are really struggling, which is why I’ve announced that we’re getting rid of the punitive, payday loan premium for councils that have they need exceptional financial support.”
Ms Rayner also used the speech to launch a new “Council of Leaders”, made up of local politicians and ministers, which she said would look to tackle common problems and deliver for communities.
“I have formally launched our new Leaders’ Council at this conference, which will give local government a voice at the heart of government – this is a sign of how seriously we take this,” she said.
Central to Labour’s approach to local government is the belief that those with “skin in the game” should be put “back in the driver’s seat”, she said.
As part of efforts to give councils greater autonomy, the Government has also proposed that local authorities could be given the power to decide for themselves whether councilors vote by proxy or attend meetings virtually .
“It’s not our place, for example, to decide whether councilors should attend your meetings remotely or use proxy votes when they need to,” Ms Rayner said on Thursday.
“So I can announce again today that we are bringing forward proposals to allow councils to make the decision for themselves, meaning that people from all walks of life can benefit from local democracy, whether whether they have caring responsibilities or not. ‘I cannot make it to the town hall in person due to illness or disability.’
Under the Government’s proposals to overhaul the local government standards framework, councils would also be able to suspend members who breach codes of conduct in an effort to stamp out bullying, Ms Rayner announced.
To prevent councilors themselves from being harassed and abused, ministers will also consult on ending the requirement to publish members’ home addresses.
The Deputy Prime Minister said she hoped the moves would help push power out of Whitehall after years of “pooled power” by successive Tory governments and end the “Dragons’ Den” style of advice on bidding for competitive funding pots.
“For all the promises of localism and equalisation, there was an assumption that if something needed to be done, it should be done from Whitehall, with the concentrated power of central Government, micro-managing you , to intervene in an uncoordinated and unhelpful way,” she added. said.
“A begging bowl system of competitive amusement pots which led to councils bidding to pay for chess tables in public parks.
“Not anymore. We are turning the page on this failed approach.”
LGA Chairman Louise Gittins welcomed the “(action) of the Government on our request for a reset of relations and a new way of working with local government”.
“As we set out in our White Paper on Local Government, it is time for a new, equal and respectful partnership between local and central government,” she said.
“To face the challenges of the next ten years there will be a need for a new, connected and strengthened system of governance that will be keenly focused on improving people’s lives.
“The Leaders’ Council will enable local government to bring its expertise and front-end experience to the table and help ensure we can deliver on the issues most important to local communities, providing solutions to the complex challenges we face such as nation.”
The Conservative Party has been contacted for comment.
