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21.12.12

Councils must put fair funding deal to work – Pickles

The new local government financial settlement has been published, labelled the “right road” by communities secretary Eric Pickles.

But the LGA said that further cuts to councils’ spending power will harm economic growth, council services and vulnerable people.

70% of councils’ income will now be raised locally, compared to 56% under the central grant system. From April 2013, councils should encourage local jobs via new business rate retention incentives to reward growth.

The Department for Communities and Local Government has published a document detailing 50 ways for councils to cut spending, including sharing back offices, adopting Community Budgets, tackling fraud, closing subsidised council canteens, hiring out the town hall and stopping translating documents into foreign languages. To prove the point, a new ‘pop-up shop’ has been launched in DCLG’s own offices.

The settlement will see an average council spending power of £2,240 per household and councils will be protected from further spending reductions for 2013-14, Pickles said, with the reduction expected to be limited to just 1.7% per household.

More weighting will be given to areas with the highest levels of assessed need, and £450m will be available over the next two years to freeze council tax.

Pickles said: “Councils must keep doing their bit to tackle the inherited budget deficit because they account for a quarter of all public spending and still get through over £114bn of taxpayers money each year.

“Today’s announcement is a fair funding deal that will reward councils ready to strive for their communities and gives them another year to get their house in order.

“Councils must do three things to get on the right road for their residents: put our fair funding deal to work; do every single one of our 50 ways to save; and accept our Council Tax freeze offer. Councils that cry wolf without having done all of this are letting their residents down.

“Councils that put their thinking caps on now can save precious taxpayer pennies next year by cutting out waste and transforming frontline services that vulnerable people rely on.”

But Sir Merrick Cockell, chairman of the LGA, said: “Today's confirmation of a further reduction in funding for local services comes on top of the unprecedented cuts councils already have to implement. This is bad news for local services and undermines the role councils can play in promoting economic recovery.

“It is good that the Government has taken significant steps to soften the possible negative financial impacts of changes to business rates distribution and funding for education services. Despite these sensible moves, councils are still exposed to some sizable new costs and risks which could draw money away from other services.

“Local government has borne the brunt of cuts to public spending and today's announcement confirms that this will continue to be the case until 2015. What was scheduled to be an extremely challenging 28% reduction in council funding will now exceed 33% and, for some councils, may go much higher. In comparison, Whitehall departments' budgets are being cut by on average 8%. This pattern cannot be repeated into the next spending review period. Councils are one of the few parts of the public sector which actively promote economic growth. Curtailing that role hampers Britain's economic recovery.”

Jules Pipe, chair of London Councils said: “This Local Government Finance statement confirms that local communities and the vital services councils provide are bearing the majority of the pain of paying off the deficit. It’s 30% reduction over the four years till 2014.

“Council services – caring for the elderly, services for children, housing the homeless and maintaining a healthy and clean local environment are key services for Londoners.

London councils have been at the forefront of introducing efficiency savings while maintaining and where possible improving local services so that the impact on residents is minimised. That’s our job.

“The Secretary of State for Communities and Local Government should not be complacent – he cannot go on reducing funding for local services without impacting on London’s communities and the quality of services. London’s councils will continue to argue for additional funding to meet Londoners’ specific needs as a world city – 90,000 new school places needed for and 36,000 new homes needed every year.”

The 2013 - 2014 spending power calculation includes:

£26.07 billion start up funding assessment (which includes £10.9 billion of locally retained business rates)

£23.9bn in Council Tax

£859m for NHS funding to support social care

£661m via New Homes Bonus

£240m for 2013 to 2014 Council Tax freeze grant

£112m via the Weekly Collection Support Scheme

£33.5m via New Burdens for Council Tax Support in 2013 to 2014

(Image: Stefan Rousseau/PA Wire/Press Association Images)

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