Stockton's Infinity Bridge

Councils count cost of further Government cuts in Provisional Local Government Finance Settlement

19 December 2013

Councils across the North East are assessing the cost of today’s announcement in the Provisional Local Government Finance Settlement for 2014/15.

11 out of 12 councils in the North East for 2014/15 will have higher than the English average reductions in spending power.  The cumulative impact of such spending power reductions is a loss of over £109 million which equates to a reduction per dwelling of £91.93 for the North East.   The English average reduction in spending power is 3.1%, equating to £71.58 per dwelling.

The worst affected North East council is Middlesbrough which has a reduction of 5.3% equating to a reduction of £141.54 per dwelling.  South Tyneside and Sunderland both see a reduction of 4.7% and Newcastle will have a reduction of 4.6%.

Contrasted with the North East, the settlement for 2014/15 represents a gain for more affluent authorities elsewhere in the country.   As an illustrative example, Epsom and Ewell has a 3% increase in its spending power which equates to an increase of £9.39 per dwelling.  Uttlesford in Essex will see a 4.9% increase in its spending power, equating to a £15.07 increase per dwelling.

Cllr Watson, Chair of ANEC said in response to today’s announcement from the Department for Communities and Local Government, “These figures further underline the impact of moving to a system that is based on the wealth areas can create rather than allocating resources on the basis of need. It feels inequitable and unfair that ultimately the impact of this is that authorities in more affluent areas – areas that have less need and demand for the vital services councils deliver – are benefitting, whilst those who have high demand and fewer resources are having to make further cuts”.

“The Government argues that the new funding system creates an incentive for growth. But in order to achieve growth, councils need to be in a position to continue the good work on creating the conditions for businesses to thrive.  Without sufficient resource, this becomes much more difficult.  There are some things that we believe can be done to correct the flaws in the system that are creating some of the anomalies, and we will be raising these with Government as part of the consultation.  In addition, ANEC proposes to hold a consultation briefing with MPs on 14 January, in advance of the 15 January deadline for responses to the consultation on the provisional local government finance settlement”.

Spending power