Magazine article Public Finance

Life Is Tough, Town Halls Tell Minister

Magazine article Public Finance

Life Is Tough, Town Halls Tell Minister

Article excerpt

Just one week before Christmas, councils found out how much money they will receive from Whitehall in the next financial year. Local government minister Kris Hopkins set out the funding settlement for 2015/16 containing an average cut of 1.8% in spending power, calculated using government grants, revenue from the council tax and locally retained business rates.

This cut is a necessary part of the deficit-reduction effort, Hopkins said. No councils will face a loss in spending power of more than 6.4%, the lowest of the parliament, he added.

"English local government is expected to spend over £114bn 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,' Hopkins told MPs on December 18.

'As planned, we have kept the overall reduction to 1.8% - 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%.'

Ahead of the confirmation of the figures, expected in the week leading up to the parliamentary recess on February 12, the settlement has promoted debate on both the extent of the reductions and how to deal with them.

At the Local Government Association's annual finance conference on January 6, Hopkins insisted that, as a former councillor himself, he recognised the difficulties imposed on authorities by the reductioa 'I'm not standing here from a position of ignorance, I know the challenges you face,' he said.

He noted, though, that the sector is making varying degrees of progress on reforms to services so they can deal with the reductions.

'Not all authorities have made that journey, and some are quite early on in that process,' Hopkins said. 'But there isn't time for a Manchester-style evolution over 10 years or so [which led to a devolution deal being agreed with government last November] - we need to get to an accelerated position as soon as possible to make sure that we can make the transformations that are needed for services.'

However, Hopkins faced criticism for the 1.6% figure as the settlement includes both ring-fenced grants from Whitehall that are essentially passported to councils and Better Care Fund spending, which is being pooled with the NHS.

An analysis by CIPFA found councils' 'unfenced' spending power is reduced by 6% once allocated money and pooled resources are excluded, while the LGA said it could be as high as an 11.8% average cut if locally-raised council tax and money to cover new burdens is removed.

Dick Tonge, Conservative cabinet member for finance at Wiltshire County Council, said the government's spending power calculation had undermined councils. We're saying that we have to cut services locally or manage things differently in order to get our costs down, and you're going about saying there is only a cut of 1.6%,' he told Hopkins. "But there is ring-fenced money included in that You're making our life extremely difficult, because if someone comes up and says, "Eric [Pickles] says it's 1.6%, you're lying to us", then you get into a complicated argument that some of that is the Better Care Fund, which is ringfenced, we can't use it for other things. It's made it very difficult for us to explain the cuts we're going to have to make. …

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