LOCAL GOVERNMENT FINANCE

  I am responding to your letter of 15 December regarding by what means the assurances given to the Local Government Association by Ministers about the additional costs to councils of implementing the Licensing Act 2003 were delivered and to what extent I consider them to be "watertight". I am grateful for the opportunity to give evidence on 21 November last and to provide this further information.

  I, and other senior LGA politicians, have lobbied long and hard to ensure there will be no liability for the council tax payer from the costs of implementing the new licensing laws. While it is, I feel, unhelpful that neither the Act nor the fees regulations made thereunder set out the policy specifically, I can confirm that the Secretary of State, Tessa Jowell, and the Local Government Minister, Phil Woolas, have recently, both in correspondence and in meetings, stated unequivocally that council tax payers will not be liable. Ministers have also made similar statements in Parliament: in debates during the passage of the bill; in response to Parliamentary Questions and in written statements. The latest statements were made on 5 December 2005 by Licensing Minister, James Purnell, and the Local Government Minster, Phil Woolas.

  Such assurances, made over a three year period, have of course much weight and it is a reasonable expectation that these promises will be kept. The issue for councils is that many have accrued losses over the last two financial years and that these losses may well impact on council tax levels in some areas. For that reason, we were disappointed not to get a cash injection "up front" to pay for the start up costs.

  The lndependent Fees Review Panel, chaired by Sir Les Elton, was set up to consider whether the fees cover the full cost to authorities. We are working with the fees panel to collect urgently evidence of the costs to licensing authorities before councils set their budgets for next year. I would not want councils to have to surcharge on top of council tax to cover licensing costs.

  Despite the difficulties over costs and fee levels, local authorities have worked extremely hard to achieve a successful implementation of the new regime and I am greatly appreciative of Ministers' acknowledgement of that effort.

Yours sincerely

Sir Sandy Bruce-Lockhart

31 January 2006