ADA has been working closely with affected local councils to make representations to government about the increasing financial pressures on their budgets and the effect of the Special Levy payments to IDBs on those budgets. All of the councils concerned appreciate the work of the IDBs and last year supported increases, which in some cases were considerable.
The rate cap on councils (4.99%) however, includes Special Levy so when an IDB votes to increase the Special Levy by, for example, 15%, only 4.99% of that can be passed onto ratepayers, the rest coming from council reserves or savings in other services. The Rate Support Grant from Treasury used to pay a large part of the Special Levy but over the past few years, that has been gradually reduced to near or at zero in some cases.
ADA has made representations to Government about this situation and the 15 most affected Councils put a case to the Local Government Association (LGA) for the creation of a Special Interest Group (SIG) to look into this issue in more detail. The LGA have agreed to the setting up of the SIG and ADA expects relevant IDB members to play an active part in the group.
ADA is also keen to ensure that there is no adverse effects on Special Levy to the disadvantage of Internal Drainage Boards and will be closely monitoring the work of the SIG and any engagement with Government. Government did provide some financial support (£3m) in total to the 15 most affected Local Authorities earlier this year and it is hoped that through the SIG and ADA’s work, some longer-term mechanism to support Local Authorities paying Special Levy to IDBs can be agreed.
PRESS RELEASE from East Lindsey District Council
Fifteen local authorities disadvantaged by the current funding mechanism to support the vital work of Internal Drainage Boards have successfully joined together to request a sustainable solution from Government.
The District Councils have formed a Local Government Association Special Interest Group (SIG) which aims to secure a revised approach from the Government to the current funding method which has left the councils disproportionately impacted and, in some cases, financially precarious.
Internal Drainage Boards manage water levels and reduce the risk from flooding in areas where special flood management measures are needed Their work is essential for keeping communities safe and we would be lost without them. The SIG aims to showcase the essential service IDBs provide while it campaigns for a better method for IDBs to get the funds they require.
All the councils in the SIG are currently required to pay a Special Levy to fund the Internal Drainage Boards for their Council area. The levy varies from year to year and the Councils have no control over the sum. Historically, IDBs raised the levy directly from local ratepayers and, for efficiency from the 1970s onwards, the collecting of the rates was passed to local councils who then transferred them on the IDBs.
The levy is paid from the funds collected through Council Tax, meaning less money is then available to fund statutory services the Council must provide to taxpayers. In some cases, services are being cut to fund the levy.
Electric and fuel costs to power the pumps and machinery used by the drainage boards have soared, resulting in increased levies in recent years. This year, the total levy requirement from IDBs to Councils is £45.852m – up from £38,881 for 2022/23.
One of the authorities most hard hit is Boston Borough Council. In the 2023/24 net budget, the IDB levy represented 22 per cent of the Borough Council’s overall budget and took 58 per cent of the total Council Tax collected.
This year, the council tax yield was £168,000 – almost half of the IDB increase of £320,000.
Similarly in East Lindsey for 2023/24 due to the levies, the council tax yield was £321,000 compared to a IDB increase of £946,000.
This issue is unique to a handful of councils – all with relatively small overall budgets – as local authorities not covered by drainage boards do not have this financial disadvantage.
Earlier this year, the Government made a one-off payment to the 15 councils significantly impacted to mitigate the levy increase. While this was hugely welcomed, it was a one-off payment and offers no permanent solution, with the levies expected to increase further in 2024/25. For some local authorities, the one-off payment did not cover this year’s levy increase in their budgets.
Through the SIG, the councils are now seeking a longer term, more sustainable approach to how Special Levy payments to Internal Drainage Boards are funded.
Cllr Paul Redgate, Chairman of the IDB SIG and Portfolio for Finance at South Holland District Council said: “There is no doubt that Drainage Boards play a vitally important role to protect and support our communities as well as the economy. That is jointly felt by all the Councils in the SIG. The work of the drainage boards came into their own with the recent impact from Storm Babet in how they worked around the clock, pumping water to restore farmland and protect communities.
“It is extremely important the funding mechanism to support the IDBs is addressed by the Government. The current system is unsustainable and resulting in some of the Councils being placed in a position where they are having to make cuts to services to fund the levies rather than using Council Tax yield to grow services to meet demand.
“The levies may only affect a relatively small number of authorities but that places us at a significant financial disadvantage compared to authorities who do not have drainage boards.
“The formation of the SIG is a significant move for the councils to collectively lobby for a change in the way drainage boards are funded and to strongly put our case forward as the levies in their current form will continue to strongly affect our budgets and what we can and can’t deliver for our communities.”
The formation of the SIG is the latest proactive measure to highlight the deficit and serious impact the levies is having on Council budgets and service provision.
Last month, representatives from the 15 local authorities addressed the All Party Parliamentary Group for Sustainable Flood and Drought Management in London.
Christine Marshall, Deputy Chief Executive – Corporate Development at the South & East Lincolnshire Councils Partnership, was a guest speaker to the APPG and presented how the existing approach is simply unsustainable for many small councils.
From the start, the Partnership has worked collaboratively with the drainage authorities and continues to work together to lobby the Government for a fairer funding approach.
The SIG is writing to the Chancellor Jeremy Hunt; Secretary of State for Levelling Up, Housing and Communities Michael Gove, MPs in the area of each of the 15 Councils and the District Councils Network.
Chief Executive Innes Thomson from ADA (the Association of Drainage Authorities), representing drainage, water level, and flood risk management authorities, said: “The working relationship between local councils and IDBs is longstanding and crucial for the management of water levels and flood risks in the areas they function. Councils are today caught between a rock and a hard place where they are obliged to pay the Special Levy as set by the IDBs but, with rate capping, they are seriously disadvantaged in not being able to pass on all the Special Levy charges to ratepayers.
“Changes are urgently needed to alter this catch-22 situation for Councils without disrupting the essential work of the IDBs.”
Cllr Darren Rodwell, environment spokesperson for the LGA said: “We are pleased that the Internal Drainage Board Special Interest Group is joining the local government family.
“The scale of costs being passed onto this small group of councils is not sustainable. The LGA supports their ambitions of securing a revised approach from the Government to the current funding method and we look forward to working with them.”
The Councils which have formed the SIG are:
1. Bassetlaw District Council
Other local authorities affected by IDB levies also have the opportunity to join the SIG following its formation.