More local government funding misery on the way

Clearly central government, along with its myriad of money hungry departments, expects local government to be flattered, when it comes to the combination of new burdens and funding cuts being visited upon it.    As well as being required to take on new service delivery, such as the management of council tax benefit – that came with a 10% reduction in funding from day one – it now has the new public health agenda to deliver and the national housing deficit to address.

Copied from Local Government Chronicle online

Ministers must consider the knock-on effects of their policies – 10 June, 2015 | By Keith Cooper

Ministers could impose further cuts on councils’ 2015-16 budgets, the chief executive of the Local Government Association has warned in correspondence seen by LGC.  The e-mail was circulated to council chief executives last week, as the chancellor announced £4.5bn of in-year cuts to departmental budgets across Whitehall.

These included plans to slash £200m from the Department of Health’s public health budget, a reduction that will be passed onto councils.  While the Department for Communities & Local Government saw its departmental budget cut by an additional £230m in last week’s announcement – equivalent to an 8.5% reduction- its funding for local authorities was left untouched.

In an email to local authority chief executives, LGA chief Carolyn Downs said the local government finance settlement “must be considered vulnerable”.  It adds: “Even if the government conclude, as they did in 2010, that practical considerations would make it very difficult to reopen the local government finance settlement there has to be a danger of any 5% cut being incorporated into the baseline used for the 2016-17 settlement before any 2016-17 reduction.”

A 5% cut applied to the DCLG’s local government budget for 2015-16 would be equivalent to a further £500m reduction, on top of the £3.7bn year on year reduction already applied.
While the emergency budget in a month’s time is expected to set overall tax and spend totals for the whole of this parliament, detail of further cuts are likely to be announced in a spending review, due in the autumn.  The emergency budget following the 2010 general election did not cut the local government finance settlement but did reduce specific grants.  Ms Downs said a “similar scenario” to 2010 “cannot at this stage be discounted”.

She added: “The LGA will continue to put forward the case for local government in the run-up to the spending review.”
A statement from the Treasury said the savings to the DCLG had found further in-year savings of £230m, largely though the sale of assets owned by the department and its arm’s-length bodies, such as the Homes and Communities Agency.  Asked if councils could face further in year cuts in July’s emergency budget, a spokesman for the DCLG said: “There has been no reduction in DCLG funding to local authorities.

“The 2015-16 local government settlement will not be reopened.”

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