The local government finance settlement, announced yesterday, has attracted angry criticism from the LGA and the Society of Local Authority Chief Executives and Senior Managers, among others.
Local Government Association chairman Merrick Cockell said that the settlement undermined councils’ ability to promote economic recovery. “What was scheduled to be an extremely challenging 28 per cent reduction in council funding will now exceed 33 per cent,” he said. “And, for some councils, may go much higher. In comparison, Whitehall departments’ budgets are being cut by on average 8 per cent. 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.”
Cockell welcomed the steps taken to soften possible negative financial impacts of changes to business rates distribution and funding for education services.
Joanna Killian, chair of the Society of Local Authority Chief Executives and Senior Managers (SOLACE) said: “Today’s local government settlement confirms that local government will continue to bear the brunt of public sector cuts. The cut of up to 8.8% provides no comfort for the next twelve months and when added to further cuts in 2014/15 will present significant challenges at a time when local government should be focused on economic growth. This settlement is late and the uncertainty and speculation has only made a critical situation worse.” The settlement will, she added, increase the risk of more councils being financially unviable. “Focus needs to be given to how this market failure is managed,” she said.
Dr Jonathan Carr-West, director of the Local Government Information Unit (LGiU) said that the settlement represented a further 2% cut for 2014/15 on top of planned cuts. Protection for 2013/14 budgets translates to £240m that councils will have to spend, he added, saying: “We must hope that this will allow councils a small amount of breathing space amidst the implementation of the council tax benefit devolution, the cuts already planned for 2013/14 and in advance of the 2% cuts planned for the financial year 2014/15.”
The shadow Communities and Local Government Secretary Hilary Benn MP said that the government didn’t understand the impact it is having on services and the Tory former chair of the LGA Baroness Eaton said that the cuts were “detached from the reality that councils are dealing with”. Benn pointed out that Liverpool, the most deprived local authority, is facing a 7.7% cut over two year while West Oxfordshire, David Cameron’s council, is getting a 1.1% increase.
Eric Pickles called the settlement “the greatest shake-up of council finance in a generation”. It includes £26bn in start-up funding, (£10.9bn of which is in locally retained business rates) with more weighting being given to areas with the highest levels of need. An extra £450m for two years is set aside to help councils freeze council tax with authorities rejecting the freeze being made to have referendums to raise band D bills by more than 2%.
Consultation on the settlement ends on January 15.