Local government funding cuts – the truth?

Copied from Local Government Chronicle online
Hardest hit face cuts of 15% next year
2 January, 2013 | By Ruth Keeling

Cuts to some councils’ core grant allocations could be as high as 15% next year – potentially rising to almost 40% by 2014-15 according to LGC analysis of data on the local government finance settlement.

Figures for councils’ individual ‘start-up funding assessment’ – which provides a measure of their main basic revenue streams – show an average cut of 4% next year and 9% in 2014-15.

The settlement – announced by ministers on 19 December – saw ministers focus on their preferred measure of councils’ ‘spending power’ which includes a wide range of service-specific grants and an estimate of council tax revenues and showed an average reduction of 1.7% last year.

But a detailed breakdown of each council’s individual allocation was not published until Friday the 21st – literally hours before the end of the last working day before the Christmas break.

LGC’s analysis of these figures show some authorities face cuts to their ‘start-up funding assessment’ as high as 15% next year. With cuts in 2014-15 set to be even more severe, the sector faces an average reduction of 12% over the second half of the spending review, with hardest-hit council potentially facing cuts of as much as 39%.

The start-up funding assessment measure does not take into account payments made under the New Homes Bonus, which stands to substantially benefit many district councils. Furthermore, figures for revenue streams in 2014-15 are no more than predictions as the new system of retained business rates will by then be in effect.

Those worst affected by the cuts have been offered a transition grant in 2013-14, re-badged as an “efficiency support grant” – designed to limit cuts in spending power to 8.8% but which has the effect of limiting cuts in start-up funding assessment to 15% in the first year. However, the efficiency grant is not assured in the second year and depends on whether councils make certain improvements to the way they deliver services.

Without the grant the worst hit – Great Yarmouth BC, which pulled out of a shared management arrangement following last May’s elections – will face cuts of 28% in 2014-15, creating a cumulative reduction of 39% over the two final years of the spending review period. But even councils not eligible to receive the emergency grant could be facing cumulative cuts of potentially 25%.

The table below shows authorities not cushioned by the efficiency grant will face reductions in their start-up funding assessment figure in excess of 20% over the next two years. Authorities eligible for the efficiency grant are marked with an asterisk.

Council 2013-14 % change Cumulative % change 2013-14 to 2014-15
Great Yarmouth* -15% -39%
Burnley*. -15% -38%
Barrow-in-Furness* -14% -36%
Bolsover*. -14% -35%
Hyndburn* -13% -34%
Pendle*. -15% -33%
Hastings* -15% -33%
Chesterfield -14% -25%
Preston -13% -24%
Copeland -10% -21%

‘Start-up funding’ v ‘spending power’

The new ‘start-up funding assessment’ refers to a local authority’s share of the spending control total. This SUFA figure is made up of two parts: an authority’s revenue support grant in that year and the baseline funding level as set for the start of the business rate retention funding system.

‘Spending power’ includes the start-up funding assessment and 13 other council revenue streams ranging from those affecting very few authorities, such as funding for fish conservation authorities, to more widespread items such as council tax requirement, social care funding and New Homes Bonus.

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Local politicians to be stitched up

The government looks set fair to ensure that local politicians of all persuasions carry the can for the housing shortage in this country.  Having removed the regionally imposed housing number requires, to a great hurrah from the Party faithful in the more affluent areas of the country, ministers are now saying that it is up to councils to convince the locals that development is good for them.  See the quote from one of Greg Clark’s bag carriers below. 

Developers will be allowed to build “what they like, where they like” if councils fail to give permission for sufficient new housing schemes, a Conservative MP has said.  John Howell, parliamentary private secretary to minister for decentralisation Greg Clark, warned that if councils failed to plan for new development, it would be assumed that they had a “completely permissive planning system”.  As a result, he said a developer could build “what they like, where they like and when they like”, as long as they meet new national planning standards that are being worked on alongside the Localism Bill.

He stressed that the government’s new planning system aimed to lead to more development, not less development.

The new government obviously learnt at least one lesson during their time in opposition.  Simply setting housing numbers doesn’t mean houses get built.  Also, because these housing numbers were set regionally, it made it appear to be the government’s fault.  they weren’t going to have that.  Afterall, there were plenty of other things they were in line to be blamed for that they wouldn’t be able to pass the buck for, without taking the blame for this as well!

Enter Baldrick (or should we call him Pickles in order to bring it up to date) with a cunning plan.  Why not scrap the government imposed figures, whilst at the same time cutting the local government grant, top slicing what’s left and then only giving them that bit back if they build more houses – Brilliant!   Not only does this get the housing deficit off of our backs, it also well and truly sticks it to local government, that I never liked anyway – Double brilliant!!