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Anger as councils face funding cut

Cuts in Government funding for local councils will fall most heavily on the areas of greatest need, a leading accountancy body has found, as town halls warned of potential cuts in services like libraries, road maintenance and bin collections.

The Department for Communities and Local Government announced a provisional funding settlement for local authorities in England, which minister Kris Hopkins said would amount to an overall 1.8% reduction in councils' spending power, with no authority facing cuts of more than 6.4%.

Mr Hopkins described the settlement as "fair to all parts of the country - North and South, rural and urban, city and shire" and said that every council should be able to deliver the necessary savings while protecting frontline services. He announced £275 million in Government funding to help town halls freeze council tax and urged every authority to take up the offer.

But the Local Government Association said that the cut in central government grants amounted to 8.8%, and warned that town halls will be forced to consider cutting services as they slice an estimated £2.6 billion off their budgets for 2015/16.

And the Chartered Institute for Public Finance and Accountancy (Cipfa) put the reduction in central grants at 14.6% and said the actual reduction in average spending power was 6%, with some councils facing cuts in their budgets of almost 11%. The DCLG figure was more than three times lower because the Government included in its calculation grants which are ring-fenced for specific purposes or are part of NHS budgets, and are administered by councils but over which they have no control, said Cipfa.

Biggest falls in un-ringfenced spending power will be felt in London (8.01%), the North-East (7.75%) and the North-West (7.42%), while the affluent South-East will face cuts of just 3.42%, said Cipfa. While metropolitan councils covering major cities will see an 8.35% cut, reductions in shire counties will average 4.65%, the figures suggested.

Some rural areas will see increases in their un-ringfenced spending power, such as Tewkesbury (3.2%), Uttlesford (3.1%), Horsham (2.9%) and East Devon (2.7%), while the biggest reductions will be seen in disadvantaged urban areas like Knowsley on Merseyside (10.9%), Hull (10.8%), Liverpool (10.7%), Manchester (10.5%) and Middlesbrough (10.4%), according to the Cipfa figures.

Cipfa chief executive Rob Whiteman accused the Government of using figures which hide "the true size and scope of the cuts many local authorities face" and called for the creation of an independent body to allocate local authority funding.

"Once you peer behind the opaque measurement of funding used today, you see that the disparity of impact across the country and between different types of authority is significant and needs to be considered carefully by policymakers," said Mr Whiteman.

"If local people and councils are to have confidence in central Government and the way it allocates taxpayers' money, we need to see an end to these disingenuous presentations of funding."

The LGA said the settlement brought to 40% the total reduction in central government support since the coalition came to power in 2010, with town halls required to make savings totalling £20 billion over the period.

With little scope for further efficiency savings, some 60% of councils were now considering stopping at least some services next year, said LGA chairman David Sparks.

"The savings of more than £2.5 billion councils need to find before April will be the most difficult yet," said Mr Sparks. "We cannot pretend that this will not have an impact on local government's ability to improve people's quality of life and support local businesses. "

Graeme McDonald, director of the Society of Local Authority Chief Executives and Senior Managers (SOLACE), said: "The financial challenge facing local government is immense. Cuts of up to 6.4% will push some authorities to breaking point.

"Government is beginning to recognise that councils have led the way on deficit reduction, but with cuts and demand increasing, fragility is beginning to show. The financial future of local services is unsustainable without a more ambitious plan for public service reform."

Mr Hopkins insisted: "The local government settlement is fair to all parts of the country - North and South, rural and urban, city and shire - therefore every council should be able to deliver sensible savings while protecting frontline services for local taxpayers."

He suggested town halls should consider dipping into their reserves rather than cutting services.

"Over the last year, councils have increased their reserves by £2.2 billion so they now stand at a total of £21.4 billion," he said.

"Authorities should of course maintain a healthy cushion when balancing the books. However, local taxpayers would be right in asking whether such substantial reserves are necessary."

Shadow communities secretary Hilary Benn said: " Instead of a fairer settlement the Government has hit the communities with the most need the hardest, and instead of giving councils the long-term budgets and freedoms they need to make real long-term sustainable savings, the libraries that enrich our children's education, the social care for our elderly to keep them healthy and out of hospital and the everyday council services like bin collections and street cleaning are bearing the brunt."

Unite national officer Fiona Farmer said: "Local councils are already at breaking point with services being cut to the bone or stopped completely. Many are staring into the financial abyss of bankruptcy because of this latest round of cuts which will eat into key services we all rely on.

"Local government needs a fair funding settlement. It is simply not sustainable to expect councils serving some of the poorest communities in the country to bear the brunt of the Tory-led Government's addiction to austerity."

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