Early figures reveal cuts of 16% for some councils

Copied from Local Government Chronicle online
8 August, 2013 | By Ruth Keeling

Councils forced to revamp their savings plans after early sight of their individual funding allocations revealed cuts as high as 16% in 2015-16.

The indicative allocation figures, released last month by the Department for Communities & Local Government, have caused alarm within local government which had expected cuts of around 10%.

Councils suffering the deepest cuts have warned they could now be pushed towards a ‘doom’ scenario where services would have to be closed and vital growth plans ditched.

The extent of the cuts is the result of a series of ‘top slices’ taken from councils’ revenue support grant to fund central government programmes, such as the ‘Dilnot new burdens’ budget announced by the chancellor last month.

The hardest hit councils have been told their funding settlement assessment could fall by 16% in 2015-16. Only two authorities, Wokingham BC and Surrey CC, face cuts of less than 10%.

North Kesteven is among 69 councils facing a 16% cut. Deputy chief executive Alan Thomas said the authority might have to rethink its growth priorities. Its previous £1.75m saving plan will now have to be increased to £2.25m, equivalent to 15% of its £11.5m a year net budget.

Mr Thomas said the Conservative-run council might also review its existing policy of reserving New Homes Bonus payments for infrastructure spending. “I think we are going to have to take a different view of that now and use quite a bit of that New Homes Bonus to support core spending, otherwise we won’t be able to balance the books,” he said.

The authority was already reeling from the “absolutely devastating” government announcement that up to 35% of New Homes Bonus income will be handed to local enterprise partnerships from 2015-16, he added.

Districts and inner London boroughs were the hardest hit group of councils in 2015-16, facing 15% cuts on average. Outer London boroughs, metropolitan districts and unitaries face reductions of 14%; counties will see an average reduction of 13%.

David Huxtable (Con), cabinet member for resources at Somerset CC, which faces a 15% cut, said the reduction matched its most pessimistic plan and would have “a huge impact on services”.

He said: “We will have to stop doing things… We will only be looking after statutory services.”

While the early release of individual figures for 2015-16 has been welcomed, treasurers bodies are due to meet senior civil servants to discuss missing details in the coming months.

Brian Roberts, former president of the Society of County Treasurers and Leicestershire CC director of corporate resources, said: “Having these before the summer recess is very helpful. But there is still a lot of uncertainty.”

Money from a supermarket, or blood from a stone?

I received this email text today, it contains an intriguing idea, that seems almost too good to be true. A way of getting supermarkets to put something back into the communities from which they get so much!

I am contacting you to ask for your help regarding a new idea that would bring your Council more money.

The idea is based on legislation passed last year by the Northern Ireland Parliament to add a new levy on large supermarkets of 8.5% based on their current rateable value. Last year the Scottish Parliament passed similar legislation for a levy of 9.3%.

The idea is for English local authorities to be given the power to introduce a similar levy in their areas and to collect the revenue and spend it in ways they think would help local communities.

Evidence shows that the revenue from this levy has helped local businesses and communities in Northern Ireland and public services in Scotland.

Furthermore the concerns about this levy are unfounded: the British Retail Consortium have specifically said that the levy will not be passed on to customers, inward investment has increased in Northern Ireland and there would be a positive effect on employment.

Specifically, the proposal is:
“That the Secretary of State a) gives Local Authorities the power to introduce a local levy of 8.5% of the rate on large retail outlets in their area with a rateable annual value not less that £500,000; and b) requires that the revenue from this levy go directly to the Local Authority in order to be used to improve local communities in their areas by promoting local economic activity, local services and facilities, social and community wellbeing and environmental protection.”

The evidence for this and more is in the updated proposal here.

To date, 63 councils (of all party leaderships) have expressed serious interest in submitting this idea as a proposal under the Sustainable Communities Act. I very much hope that your council would be interested in joining them. We think this proposal now has a real chance of success and want to work with councils to help achieve it.

Could you please put forward a motion for your next Council meeting resolving to submit this proposal under the Sustainable Communities Act? Further below is a suggest version for convenience.

Please keep me informed of any progress on this matter. Please contact me if can provide any assistance with this. My contact details are directly below.

Kind regards
Steve Shaw
National Co-ordinator
Local Works – helping councils use the Sustainable Communities Act
office: 020 7278 4443 direct: 020 7239 9053 mobile: 07788 646 933website: http://www.localworks.org

SAMPLE MOTION
notes the request from ‘Local Works’ to consider submitting the following proposal to the government under the Sustainable Communities Act:
‘That the Secretary of State gives Local Authorities the power to introduce a local levy of 8.5% of the rate on large retail outlets in their area with a rateable annual value not less that £500,000 and requires that the revenue from this levy be retained by the Local Authority in order to be used to improve local communities in their areas by promoting local economic activity, local services and facilities, social and community wellbeing and environmental protection.’
The Council notes that if this power was acquired it would present the opportunity to raise further revenue for the benefit of local communities, should the Council wish to use it.
The Council resolves to submit the proposal to the government under the Sustainable Communities Act and to work together with Local Works to gain support for the proposal from other councils in the region and across the country.

Crisis leads to council tax referendum call

Copied from Local Government Chronicle online
30 May, 2013 | By Mark Smulian

Herefordshire Council could become the first to hold a council tax increase referendum after an emergency meeting over a budget crisis.

This followed a review by incoming chief executive Alastair Neill, which found the budget set only in February contained errors and weaknesses.

It must now save an extra £8.4m this year and make 290 job cuts, against some 120 originally intended.

The council has saved some £21.1m over the last two years, and must save a further £32.2m over this year and the next two.

Mr Neill’s review found areas in the February budget “where the plans were not sufficiently resilient and [where] additional savings need to be made to ensure that the council delivers its plan within its budget”.

This included £1m of procurement savings which had “slipped and needed to be tackled” and £3.8m of learning disabilities grant which had in effect been counted twice.

Tony Johnson (Con), the council’s new leader, said: “We are facing a very challenging time over the next few years and as such we need to consider alternative approaches to delivering some of our services.

“Inevitably, non-mandatory services must bear the brunt of the cuts and although this will unfortunately involve job losses, it does not automatically mean the loss of services.”

The extraordinary council meeting agreed that the cabinet would consider holding a referendum to increase the 2014-15 council tax above whatever cap level is imposed.

Some 25% of Herefordshire’s income comes from council tax, which it had frozen from 2011-13. It increased it this year by 1.9%, equivalent to £1.5m.

Cllr Johnson said: “We must consider the possibility of raising council tax responsibly and proportionately across the county, as we begin to consider next year’s budget.”

Before doing so, he wanted to gauge whether residents “would be prepared to vote in favour of raising taxes to protect the county’s vital services”.

The coalition dropped Labour’s council tax cap, but substituted a system where tax could be raised above a nationally defined level only following a local referendum.

No council has yet held such a referendum, fearing both the cost and the likely outcome. In Herefordshire’s case a referendum would cost £100,000 to conduct.

In a joint statement with Unison, Herefordshire said it had agreed to reduce from three to two the number of days of unpaid leave to be taken during the Christmas period and to increase redundancy terms from the statutory minimum to 1.5 times that level.

Unison would prefer to keep in-house provision but will engage “fully in consideration of alternative business models that may be required in areas of service, where the council has to reduce or withdraw funding”.

Benefit schemes to be cut back next year

Copied from LGC online
14 March 2013 | By Ruth Keeling

Many people on low incomes will see big jumps in their council tax bills when the government stops funding schemes to cushion them from the removal of benefit, research seen by LGC reveals.

Almost 20% of the 195 billing authorities receiving a share of the £100m pot intend to switch to less generous support regimes in 2014-15 or review the more generous ones that transition cash helps fund, according to National Policy Institute figures.

This comes after the government announced one year of funding for schemes that aim to limit the council tax liability of claimants who previously received a 100% discount on bills to just 8.5%.

The funding, revealed in October, led many councils to change their original plans.

Sabrina Bushe, a researcher at the NPI who is compiling the figures, said they provided an early indication of what authorities would do next year.

“Many councils will simply revert back to the – sometimes quite harsh – schemes that they had initially consulted on,” she said.

The NPI figures show that 13 of the 195 councils will switch back to less generous discount schemes in 2014-15, while 23 will put this year’s regime under review.

Sevenoaks DC, one of the authorities reverting to a less generous discount regime, will expect claimants to pay a minimum of 18.5% of the total tax. Council leader Peter Fleming (Con) said that the 18.5% figure reflected the size of the funding cut applied to Sevenoaks.

The council was unable to use other budgets to plug the financial gap once transition funding ran out, he said. “We are making far more than 10% savings in all our other budgets,” he said.

Referring to the need for councils to fund support schemes, he said: “They have handed us something extra and are not fully funding it.”

Another authority reverting to a less generous scheme is Newcastle City Council, according to NPI’s research. Its proposed scheme for 2014-15 will include a minimum contribution of 20%.

City treasurer Paul Woods said the council would revert to the regime it proposed before ministers announced the transition funding for 2012-13. “As we have already fully consulted on this, further consultation is doubtful and would not be good value for money,” he said.

However, Mr Woods suggested the government could combine the £50m it underspent on the transition funding with any leftover council tax freeze grant to provide a second year of transition funding. “This would give greater certainty and stability while the new arrangements bed in,” he said.

A spokesman for the Department for Communities & Local Government said the grant was to help councils deliver long-term savings.

“The expectation is local authorities will be taking all possible steps to help families with their cost of living, keeping down pressure on council tax bills by sharing services and back-office functions, cutting wasteful expenditure, and smarter procurement,” he said.

“We will consider whether further action is required in due course.”

Full list of councils

Pickles defends his tough love approach

If it wasn’t so bloody infuriating to read such utter b******ks from this blustering windbag, it would be comical. Promoting his vindictive and spiteful sound bites as ‘tough love’, hopefully will attract the ridicule it deserves from all corners of local government. Disappointingly, the editorial page of the Daily Telegraph will be falling over itself, in the next day or two, to praise this latest guff.

Copied from Local Government Chronicle online
4 February, 2013 | By Ruth Keeling

Communities secretary Eric Pickles has professed his “love” for local government, praised it for doing a better job at cutting the deficit than the rest of government.

The declaration came after a tumultuous few weeks during which more than 30 Conservative council leaders wrote a joint letter of complaint to the prime minister warning of a “fractious relationship” with ministers.

Speaking at the New Local Government Network’s annual conference, Mr Pickles declared: “I love local government.

“Sometimes I do take liberties in trying to push you on…but it is on the basis of a loving relationship. I just want you to do a little bit better.

“I am there cheering you on, I want you to do better and you can do better.”

He added: “Local government has been absolutely outstanding in dealing with the deficit. If other bits of government had shown your resolve we would be in a better position.”

Mr Pickles was responding to a question from Peter John (Lab), leader of Southwark LBC, questioning the mixed messages from ministers about the role of councillors.

“Two years ago you were questioning the need for a chief executive, but then two weeks ago [former housing minister] Grant Shapps said we were the equivalent of scout leaders. Are we volunteers or proto-chief executives?”

Cllr John was referring to a BBC interview during which Mr Shapps argued that an increase in councillor allowances in recognition of their time and career sacrifice would be inappropriate as they were “volunteers”.

Mr Shapps’ comments has sparked an angry response from councillors, especially as they came shortly after local government minister Brandon Lewis had called for councillors to be barred from the Local Government Pension Scheme. Mr Lewis has also argues they were “volunteers” but not “professional, full-time politicians”.

Mr Pickles’ protestations of love for local government were dismissed by shadow communities secretary Hilary Benn whose speech to the conference came immediately after Pickles’.

“It is no good asking local government to take on this challenge [of falling funding and rising service demand] if at the same time the people expected to take on the challenge are criticised, patronised and belittled.

Threat of revolt wins Tory shires more money

Copied from Sunday Telegraph 20 Jan 2013
By Patrick Hennessy, Political Editor

MINISTERS have backed down and promised more money after a revolt by shire Tories against “grossly unfair” cuts in local government spending.
A group of about 120 councils, mostly Conservative-controlled, warned Eric Pickles, the Communities Secretary, that reductions in spending announced last month would “crucify” rural communities.
The group was considering bringing a judicial review against Mr Pickles’s settlement, which it said would see “predominantly rural” councils receive 3.81 per cent less from central government compared with cuts of 2.05 per cent for urban councils.
Andrew Lansley, the Commons Leader, has signalled that a “correction” will be applied to next year’s spending figures.
Mr Lansley said the difference between spending on urban and rural councils was a “matter of concern”.

(Some) Districts given thumbs up for tax rises of up to 8%

Copied from Local Government Chronicle online
Districts given thumbs up for tax rises of up to 8%
2 January, 2013 | By Ruth Keeling

“Low cost” district councils who have been granted leeway over council tax next year could increase rates by up to 8% without holding a referendum.

LGC has identified the 50 district councils that are set to benefit from the extra flexibility over council tax setting announced in last month’s local government settlement.

Under the proposals set out by local government minister Brandon Lewis, districts within the lowest quartile of council tax rates in 2012-13 will be able to increase tax above 2% without a public vote as long as the increase is not more than £5 in cash terms.

There are 50 district councils in the ‘lowest quartile’ with average Band D council tax rates below £142. They include Breckland BC which has the lowest council tax rate in the country at £65 and where an extra £5 equates to an 8% increase, as well as West Oxfordshire DC and Hambleton DC, where a £5 rise is a 6% increase.

Mr Lewis, speaking to councillors during a Q&A the day after the announcement, said it was only fair that “low cost” authorities be granted some additional flexibility. However, he said it was not clear the same flexibility would be offered after 2013-14.

The potential rises available to each of the 50 councils is listed below. There is no indication yet that any of the councils in question plan to take advantage of the extra flexibility available to them.

Council Maximum increase without a referendum (£5)
Breckland 8%
West Oxfordshire 6%
Hambleton 6%
South Staffordshire 5%
Tewkesbury 5%
Basingstoke & Deane 5%
North Dorset 5%
Wychavon 5%
Hinckley & Bosworth 4%
East Lindsey 4%
Broxbourne 4%
Broadland 4%
South Cambridgeshire 4%
Vale of White Horse 4%
South Oxfordshire 4%
East Devon 4%
King’s Lynn & West Norfolk 4%
Cherwell 4%
East Northamptonshire 4%
West Dorset 4%
Exeter 4%
Charnwood 4%
Stratford-on-Avon 4%
Test Valley 4%
Huntingdonshire 4%
Wellingborough 4%
Sedgemoor 4%
Rushcliffe 4%
Malvern Hills 4%
South Norfolk 4%
West Somerset 4%
Wycombe 4%
Chichester 4%
Eastleigh 4%
Daventry 4%
East Hampshire 4%
South Kesteven 4%
Taunton Deane 4%
Runnymede 4%
Forest Heath 4%
Blaby 4%
South Hams 4%
North Norfolk 4%
East Cambridgeshire 4%
North Kesteven 4%
Chesterfield 4%
Horsham 4%
Fareham 4%
Ashford 4%
Ribble Valley 4%

Peers champion ‘graph of doom’ prediction in Lords debate

Copied from Local Government Chronicle
3 December, 2012 | By Keith Cooper

The government’s effort to discredit local government predictions of a looming social care funding crisis have failed to convince Labour and Liberal Democrat members of the House of Lords.

Peers debating the future of social care in the upper chamber this week pointed repeatedly to the now-famous “Barnet Graph of Doom” which shows that council budgets could soon be eaten up entirely by an inexorable increase in adult social care.

Senior civil servants dispatched to the Communities and Local Government had this month dismissed this prediction as overly ‘apocalyptic’ and too ‘pessimistic’.

But Baroness Barker (Lib Dem) told peers it was “understandable that people talk in apocalyptic terms about social care”.

“The Barnet graph of doom says it all. I have to say that the LGA laid it on by doing exactly what I would have done in the circumstances, which is to pick the very worst case.”

Lord Lipsey (Lab) also pointed to the north London borough’s graphic portrayal of the alleged impending social care crisis. “[The Barnet Graph of Doom] shows what the council expects to spend on services and, on another line, what it expects to be allowed to spend in total.

“By 2030, spending on social services alone, the bulk of that on old people, exceeds the total budget,” he added. “Either no bins will be emptied in Barnet…there will be no libraries or parks- no town hall even- or there will be further big cuts for old people.”

Lord Warner (Lab), a member of the Dilnot commission, agreed with Lord Lipsey’s characterisation of social care funding. “This will mean that big cities in particular lose their civic services around arts, leisure, and other things which make for a civilised society as their authorities concentrate on social care and child protection.”

Earle Howe (Con), parlimentary under-secretary of state Department of Health, challenged the “story of cuts” portrayed by his fellow peers.

“We remain firmly of the view that the funding we have provided is enough to allow authorities to maintain access to services and to provide good-quality care. Independent research from the King’s Fund corroborates this.”

“This is not the story of cuts as some critics have made out, and there is only limited evidence of the impact on services or on users.”

Baroness Pitkeathley (Lab) and vice president of Carers UK, who opened the debat sais she found it hard to recognise “the picture of local services” painted by Lord Howe.

Parish councils ‘confused’ by government stance on benefit deals

Copied from Local Government Chronicle
4 December, 2012 | By Ruth Keeling

District and parish councils have been left disappointed by the government’s decision to make every district negotiate council tax benefit deals with their parishes.

The move goes against the majority of submissions to a government consultation on the funding formula. Ninety-four per cent of respondents backed the creation of an unadjusted tax base which would avoid the need for detailed calculations for every town and parish authority.

Sandra Cowley, head of finance at Stroud DC and council tax lead for the Society of District Council Treasurers, described the decision as “astounding”; Michael Chater OBE, chairman of the National Association of Local Councils, expressed “strong disappointment”.

The government’s consultation response said it had returned to its original proposal because of concerns about the financial burden on districts should they be left covering parish shares of any mismatch between council tax benefit funding and provision.

The government’s apparent disregard for parish councils’ viewpoint comes after communities secretary Eric Pickles described ast month described them as “localism’s magic wand”.

Mr Chater said billing authorities had “a mixed track record of passing down finance to grassroots councils”. The decision to revert to the government’s original proposal to leave the decision to negotiation between billing and local councils would “put a strain on the delivery of localism and potentially weaken the trust local councils have in government”.

“The real risk for some local councils, is that the billing authority pays over no grant and the council tax base is reduced so resulting in an increase in the council tax rate charged for the local council without there being any change in the basic precept,” he added.

Ms Cowley said colleagues were “confused” by the government’s approach.

“I find it astounding after they have gone to all the trouble of running the consultation,” she said. Responses to the government’s consultation showed that 94% thought the unadjusted tax base was the right approach, including 77% of district councils who expressed concern about the complexities of calculating grant shares for a large number of parishes. “With the majority saying this is an issue they have chosen to go with the minority,” Ms Cowley added.

One district treasurer who did not want to be named said: “This is bad news our town and parish councils set their precepts mainly in December and they thought this issue had been resolved. How we liaise with more than 100 parishes at this time of year will be a new challenge.”

The Department for Communities & Local Government’s consultation response said: “16 respondents disagreed with the proposals with billing authorities making up the majority of those disagreeing. The general view was that the proposals would unfairly protect parish councils from the impact of localising council tax support and would put a financial pressure on the billing authority. Some billing authorities suggested this potential financial pressure would be higher where the parish has a precept larger than that of the district council.”

The response also said that taking action on the “basis of an assumption that billing authorities will not pass down funding…is contrary to the spirit of localism” and, as a result, “the government considers that greater weight should be given to the potential for the proposal set out in the council tax base consultation to increase the financial burden on billing authorities”.

‘Stressed’ councils set to struggle financially

From and copyright of Local Government Chronicle online
21 November, 2012 | By Ruth Keeling

A quarter of councils may struggle to balance their books in this spending review period – and more than a tenth risk running into trouble this year, the Audit Commission has warned in a wide-ranging financial health check of the sector.

The commission’s second Tough Times report shows that a growing number of councils are causing concern to district auditors. The proportion at risk of failing to keep to their budgets has risen from 10% last year to 12% in 2012-13.

Commission chairman Jeremy Newman said auditors had expressed concerns about a number of councils already showing “signs of stress” and facing further “significant challenges”.

Councils of most concern were most likely to have struggled during 2011-12, the report said. These had carried out ‘unplanned actions’ or faced relatively high funding cuts and – “perhaps more important” – had low reserves, the report added. Unplanned actions include the use of reserves and exceptional requests for capitalisation.

The commission’s report confirmed that the most deprived areas were hardest hit by funding cuts even though they continued to receive the highest per capita spending.

Cumulative cuts over the first two years of the spending review produced a 19.5% cut for metropolitan districts compared with 16.6% in London and 11.8% for counties. Metropolitan districts were the most likely to fall into the “high stress group”, the report added.

Despite these concerns, Mr Newman praised local government’s handling of severe budget cuts as a significant achievement.

The report also identified a number of trends in council spending in 2011-12 and budget plans for 2012-13, including

Central government funding fell by £1.6bn in 2012-13 while a second year of council tax freeze saw real-terms income fall by a further £400m over the same period.
Adult social care will be less protected as the only service set to be cut more in 2012-13 (3.4%) than in 2011-12 (2.2%).
Children’s social care spending is due to increase by 0.6% in 2012-13 after a 3.4% cut in 2011-12.
Planning and development will suffer less as planned savings fall from 27.2% in 2011-12 to 6.9% in 2012-13.
Housing faces further cuts of 9% in 2012-13, following a 12% budget cut the previous year.
Councils increased their reserves by £1.3m in 2011-12 despite plans to reduce them.
Treasurers described the report as an accurate reflection of councils’ experience, but warned that it could not take into account the financial risks associated with numerous funding reforms, which were due to come into force in April 2013.

Bob Palmer, audit lead at the Society of District Council Treasurers, said incentive schemes such as the New Homes Bonus and the retention of business rates would disadvantage authorities with below-average growth. “We are going to see increasing funding and financial difficulties for those councils unable to boost their domestic or non-domestic properties. That’s a serious issue that comes on top of overall reductions,” he said.

Frances Foster, chief policy officer at the Special Interest Group of Municipal Authorities, echoed Mr Palmer’s concerns. Referring to the report’s confirmation that the most deprived areas were hardest hit, she said localised business rates and council tax discount schemes would exacerbate this effect.

“It is difficult enough to deal with cuts when resources are known but build in volatility of business rates and council tax income then I would expect the ‘stress levels’ to increase accordingly,” she said.

LGA chairman Sir Merrick Cockell (Con) said councils were doing “an outstanding job in extremely difficult circumstances”. “The strain of the 28% cut in funding is undoubtedly starting to show across all service areas,” he said, pointing to cuts in the previously protected area of social care.

Sir Merrick said councils were in an “increasingly precarious position” due to funding cuts, risks to revenues and rising demand. He said the sector should be spared from a similar scale of cuts in the next spending review. “It is now time for others to do the heavy lifting,” he added.

A spokesman for the Department for Communities & Local Government said the business rate retention system could add £10bn to the wider economy. “Councils account for a quarter of all public spending – this year English councils will spend £114bn – so it is vital they continue to play their part tackling the inherited budget deficit,” he said.

Response to the report

Steve Freer, chief executive of the he Chartered Institute of Public Finance and Accountancy said the report was “positive” but pointed out it did not assess the impact of cuts on services. He also said public reactions to the cuts are “influenced in part by perceptions of fairness” and warned the governemnt to “reflect very carefully on the message from this analysis that deprived communities are bearing a disproportionate share of the pain”.

Joanna Killian, chair of Solace, also warned the that “public concern at service closures will only be heightened if this autumn sees the government’s contribution reduced even further” and called for “a full debate with the public about what local services they want and how they should be paid for is also required”.