Kris Hopkins, the Local Government Minister, has announced that councils will have a reduction in their total funding (including grants and Council Tax revenue) next year of just 1.8 per cent. While the amounts will vary no council will face a reduction of more than 6.4 per cent.
Mr Hopkins said:
“We have yet again delivered a settlement that is fair to all parts of the country – whether north, south, urban or rural.
“English local government is expected to spend over £114 billion this year – around a quarter of all public spending. This settlement therefore recognises that local authorities continue to make a vital contribution to helping pay off the deficit.
“Once again the settlement leaves councils with considerable total spending power. As planned, we have kept the overall reduction to 1.8 per cent – lower than last year and one of the lowest levels of reduction under this government. If we include the funds that government has provided to support local transformation, the overall reduction is even lower – at 1.6 per cent.”
“We have given councils a real stake in stimulating local growth. For 2014 to 2015, authorities’ own estimates show that 91% are expecting a growth in their business rates income – growth of £414 million in total.
“This includes authorities such as Barnsley, who are predicting growth in their business rates income of around £900,000, and will also gain additionally from almost £400,000 of growth that they are predicting within their enterprise zone.
“Through the New Homes Bonus, councils benefit directly from increasing the number of homes in their area and bringing long-term empty homes back into use. On Tuesday, my hon. friend, the Minister for Housing and Planning announced to the House that £1.2 billion of New Homes Bonus funding has been provisionally allocated to local authorities in England for 2015 to 2016. This brings the total to almost £3.4 billion since the scheme began.”
With the season of the goodwill Mr Hopkins included praise for some Labour councils:
“Like all parts of government, councils need to prioritise spending so it gets to those that need it most. Councils are rising to the challenge. Every council issued a balanced budget for 2014 to 2015. The majority of residents remain satisfied with the way their council runs things. It bears testament to the great skill that authorities have shown in prioritising and promoting efficiencies.
“Local authorities up and down the country are demonstrating real innovation. I have seen for myself the work underway in Kirklees to support young people so they can make a good start in life. Our investment of £400,000 transformation funds will bolster the Kirklees Cares project where children in care are receiving peer support to prepare them for leaving care.
“In Durham, a partnership of the police and fire services is using a £500,000 award to bring Community Volunteers and Neighbourhood Watch services together. This will speed-up the assessment and fitting process for fixed and mobile safety and security equipment, such as home fire sprinklers, which can save lives.
“And I was recently in Sunderland, 1 of 5 areas that had its Better Care Fund plan approved early because it was making such good progress. I met staff from both the health and social care sectors working together in the same room, with the same patients, in a brilliant new community facility that is keeping elderly people out of hospital. Sunderland projects that it can start to cut local Accident and Emergency admissions by up to 15% in the years ahead with this approach. That will save a huge amount of money, and provide people with dignity and respect in retirement.”
What about Council Tax?
“All councils should be freezing their Council Tax in 2015 to 2016 and helping people with their cost of living. We are providing additional funding equivalent to a 1% Council Tax increase, to help councils freeze.
“This is the fifth successive year of freeze funding provided by government. This brings the total package to £5 billion, which will save up to £1,075 for an average household over the course of this Parliament.
“All councils should be taking advantage of this extra government funding and freezing Council Tax for hardworking families. Councils choosing to increase should have the courage to put their case to local people. Any council proposing an increase of 2 per cent or more will need to allow local people the opportunity to approve or veto the increase in a referendum. This threshold will apply to all local authorities, including the Greater London Authority, fire authorities and police and crime commissioners.”
So there we are. Councils will protest it is “unfair” that they are facing any reduction in spending when – contrary to all the talk of cuts – central government spending is increasing. In a sense that is true. However both local and central government could and should be absorbing substantial cuts if the public finances are to be rescued. That will be the reality that will have to be faced in future years.
Labour MPs rather implied that they thought that the cut in council funding was wrong. But what will they do? These are figures for 2015/16. After the first month of that financial year they hope to be in Government. Yet there was no pledge of billions of extra emergency funding pouring into town hall coffers. That means Labour’s complaints lack any credibility.
The referendum trigger for council tax rises remains at two per cent. It is understood that Eric Pickles, the Communities and Local Government Secretary, was seeking agreement for the figure to be lower. All those who believe in local democracy and low taxation would agree – and it is disappointing that he did not succeed in this aim.
There also needs to be a mechanism where a referendum to reduce Council Tax can be achieved. There are many councils that already had cripplingly high levels of Council Tax in 2010.
Mr Hopkins has offered a generous settlement to local authorities. Naturally there will be all the ritualised anguish about what a struggle it will be for normal life to continue. The more serious concern is that spending is still continuing at a level much higher than the country can afford.