Councils told to pay their own way

THE Government was accused of unfairly targeting northern councils today as local authorities were told they will have to be self-sufficient by the end of the decade.
Greg ClarkGreg Clark
Greg Clark

Local Government Secretary Greg Clark said government grants for councils would end by 2020 as he set out details of funding for local authorities for the next four years.

New powers to retain all the business rates raised in their areas, along with council tax and service charges, will be expected to fill the gap left by the withdrawal of government grants.

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Today’s announcement could also pitch rural councils against their urban counterparts with the decision to significantly increase the amount of extra help for countryside authorities.

The amount of money taken out of general funding and focused on the most rural councils will rise from its current level of £15 million to £65 million in 2020.

Poverty levels mean northern urban councils have historically relied more on financial support from the Government.

Ben Curran, Sheffield City Council’s cabinet member for finance and resources, said: “This settlement continues the coalition government’s policy of hitting hardest northern towns and cities, areas with the greatest level of need and at the same time they are protecting some of the wealthiest councils, including quadrupling rural grants.

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“We have heard a lot of rhetoric from this government about their commitment to localism and the north, and whilst it is welcome that the government are now talking about four year settlement to give councils greater certainty, this is of little use when the certainty is that funding will be decimated by 2020.”

Leeds City Council said its Government was being cut by £34 million for the coming year rather than the expected £24 million. The difference, it said, was equivalent to 1,400 jobs or its contribution to West Yorkshire transport spending.

Council leader Judith Blake said: “Given that northern councils like Leeds have borne the brunt of spending cuts since 2010, it does not come as any surprise that again despite the positive rhetoric, we are again facing brutal cuts to our funding from the government which is far worse than we expected.

“These cuts will undoubtedly impact on our ability to deliver a range of important services, and mean we have to change how we operate in the future as the resource is simply no longer there.”

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Mr Clark confirmed the Government will continue to prevent councils raising bills by more than two per cent although town halls will be allowed to exercise a new power, set out by George Osborne last month, allowing them to increase bills by a further two per cent to help pay for social care costs.

Councils will also be able to agree four year funding settlements with the Government to help with their financial planning.

Mr Clark said: “This is an historic settlement for local government. It makes local councils fully responsible to local people for their financing – rather than central government – something that local government has been campaigning for over a number of decades. In doing so it protects the resources available to councils over the next four years, puts more money into the agreed priority of caring for elderly people, and offers councils the certainty of a 4-year budget.

“This settlement has been achieved by listening to local government leaders who have had a good track record of making savings and delivering valued services over the last five years.

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“The resources available, the funds for social care, and the long term reform go beyond what council leaders dared hope for even a few months ago. It is a vote of confidence in the power of devolution.”

Elected mayors, such as the one due to take office in South Yorkshire in 2017, will be given the power to add a “premium” to business rates bills to help pay for local infrastructure.

But in a move likely to prove highly controversial, unelected business people sitting on the area’s local enterprise partnership, will have the power of veto over any such rise.

Shadow Local Goverment Secretary and Hemsworth MP Jon Trickett said: “The message of this settlement is the same as every other one under the Tories: cuts, cuts and more cuts.

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“This settlement reduces the central Government grant to local government by more than half and doesn’t acknowledge the additional spending pressures on Local government finances which amount to double the total amount Local Government is to receive from Whitehall.

“These cuts are a political choice and not an economic necessity. The House of Commons Library have calculated that if the central government grant was maintained at the same level throughout this Parliament the Government would still be running a surplus of £4 billion in 2019/2020. Therefore there is no fiscal need for these cuts.

“Also, local authorities in deprived areas have seen cuts of £220 per head, compared to £40 per head in more affluent areas. It is clear that the Tory’s ideology is to hit the worse off hardest.”