Stockton's Infinity Bridge

Key Resource Issues for North East Councils

21 November 2012

The Association of North East Councils will launch a major report on the Key Resource Issues for North East Local Government at a Westminster briefing today (Wednesday 21 November 2012). 

Summarising the position that councils are facing, it makes proposals which would, if implemented, make a real difference to councils' ability to carry out their role and responsibilities for stimulating growth, protecting the most vulnerable and providing frontline public services.   The report illustrates how the current spending reductions are an acute issue for more deprived areas of the country.

Having previously been given assurances that no council would be worse off at the commencement of the new funding system for local government through Business Rate Retention, ANEC's report highlights significant disparities between funding available to councils in the North East and councils in the South East.

It highlights further reductions in funding to those previously announced in the CSR. In ANEC's view, many of the extra funding reductions could be avoided.

ANEC suggests alternative approaches that would see the funds required for some things such as a ‘safety net' met from funds Government is already holding.  The report's analysis also concludes that some of the initiatives that are aimed at stimulating growth in housing, for example, such as the ‘New Homes Bonus'  are likely to create a significant net loss to the North East because of the way the funding is awarded, estimated to amount to around £275m by 2018/19.

The report launched in Westminster today will cover these and other issues, including social care funding, stressing how the impact of proposed funding changes will continue to put pressure on Children's Services, which is seeing a further reduction in needs formula on top of 32.5% from 2010 to 2012 and possibly by another 15% to 2014/15.  The number of looked after children has grown by 10% nationally and by over 25% in the North East and is a major concern, particularly in the light of pressures likely to fall on social services departments. Despite councils' best efforts, demand is rising locally therefore the ability to make savings in this service is severely restricted.

Other issues covered in the report include the impact of localisation of Council Tax Benefit.  We estimate that the cut in funding available for the scheme (10%) is more likely to be nearer 12.5% and possibly as high as 15%.  The majority of councils in the North East will have to meet the significant shortfall in grant funding for Council Tax Benefit through implementing cuts in the level of Council Tax Support alongside reductions in current exemptions.  The recent announcement of £100m to help with the cost has come rather too late in the day and does not provide sufficient funding to address the gaps.

We also cover the issue of ‘damping protection' for councils which is intended to smooth out changes in funding levels to individual local authorities between financial years. Currently, the system delivers perverse outcomes where, for example, Wokingham - the second least deprived authority with one of the lowest spending power cuts in the country - continues to receive damping of over £8 million, which could increase to £9m next year.  Surrey County Council has a cut of less than £5 a head and receives damping protection of £43.9m and this could rise to £53.6m.  Greater London Authority will see its grant grow and receives damping protection of £31.4m which could increase to £86m. This contrasts sharply with authorities such as Middlesbrough, Gateshead and Durham who are all in the highest quartile in terms of deprivation, all experiencing huge pound per head cuts and all losing significant sums through contributing towards damping protection.

Councillor Paul Watson, Chair, Association of North East Councils, said: "Today's briefing aims to raise awareness of the key resource issues affecting local government in the North East.

"Local authorities are facing some of the most significant budget reduction targets across public services.  Analysts predict further reductions in the next Comprehensive Spending Review period.  Extra cuts of over £1bn have been identified for 2013/14 in recent months, most of them are, we believe, unnecessary and could be damaging to services, jobs and our fragile local economy.

"We are already engaging in the National Audit Office research on the future sustainability of councils, due to report early next year, and will be carrying out further work on demonstrating the impact of funding reductions for the broader community.  We trust this work will provide a body of evidence which will contribute to a national dialogue on the future for local government and the communities it serves."

The briefing, which will be chaired by Kevan Jones MP, is aimed at politicians, policy advisers, business and local government representatives, partner organisations and the media. 

Download Key Resource Issues for North East Local Government and the Summary.

Notes for Editors
The Association of North East Councils is the representative body for local government in the North East. It encompasses the 12 local authorities in the North East, including Northumberland, Tyne and Wear, County Durham and the Tees Valley, on issues of concern to them and the communities they serve. It is a cross-party organisation, with all of its Members democratically elected and accountable politicians.

For further information please contact Bethan Airey, Communications Officer, Association of North East Councils on 0191 261 3917, email