Newspaper article The Journal (Newcastle, England)

Fresh Cash Blow Set to Hit North

Newspaper article The Journal (Newcastle, England)

Fresh Cash Blow Set to Hit North

Article excerpt

Claims that the Government had favoured the North in sharing out council spending were rubbished last night - as it emerged that the region faced a new funding threat.

A report today by the Audit Commission, the Government's financial watchdog, blames last year's high Council Tax rises in the South on redistribution of funding to the North and Midlands.

But it ignores the loss of funding to key North-East councils due to population decline - and was last night dismissed as a generalisation.

And it emerged that new rules on defining deprivation could lead to a further haemorrhaging of Government cash from the region.

The commission's report stated: "Grant redistribution - which moved grant from London and the South to the Midlands and the North - led to some councils putting up Council Tax more than others."

The West Midlands certainly benefited from the shake-up with a 7pc funding increase last year, but the North-East received the national average rise of 6pc.

Tyne Bridge MP David Clelland said: "I wouldn't accept that there has been a shift the North. That is a bit of a generalisation.

"I do know that the North-East is the poorest region in the country but got the lowest average settlement this year."

Since the commission carried out its survey, the Government has announced the settlement for 2004/05, which awards the North-East the lowest increase of all regions - 4.3pc compared to 5.3pc for the West Midlands.

And new rules which cite a lack of affordable housing as a measure of deprivation look set to widen the funding disparity.

The proposed change to the Government's index of deprivation will almost certainly mean more cash for parts of London where house prices are beyond many public sector workers. The North-East, where housing is still relatively cheap compared to the rest of the country, stands to lose out. …

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